Big Lots Inc., the embattled discount retailer, has reached a pivotal agreement with Gordon Brothers to save hundreds of its stores, sidestepping the risk of a complete shutdown following its recent bankruptcy filing.
A Lifeline for the Brand
On Friday, Big Lots announced a transaction with Gordon Brothers Retail Partners LLC aimed at transferring its brand, stores, and distribution centers to new operators.
The agreement marks a significant turnaround after a prior deal with Nexus Capital Management LP collapsed earlier this month, threatening the chain’s survival.
As part of the deal, Variety Wholesalers Inc.—a company operating discount chains across the Southeast and mid-Atlantic—plans to acquire between 200 and 400 Big Lots locations.
Variety Wholesalers intends to continue running the stores under the Big Lots name, with the possibility of employing existing store, distribution center, and corporate staff to support the ongoing operations.
“This agreement represents our best opportunity to save jobs, maximize the value of our assets, and preserve the Big Lots brand,” said Bruce Thorn, President and CEO of Big Lots.
Details of the Deal
The proposed transaction is still subject to certain conditions and requires approval from a bankruptcy judge. Big Lots is set to appear in Delaware bankruptcy court on Monday to seek the necessary clearance.
Before its bankruptcy filing in September, Big Lots operated over 1,300 locations and employed more than 27,000 workers.
The company’s earlier deal with Nexus fell apart due to a lower-than-expected inventory appraisal, which rendered the transaction economically unfeasible, according to reports.
In the wake of that failed sale, Big Lots began liquidation sales at roughly 870 stores while exploring alternative transactions to preserve as much of its footprint as possible.
Delaware bankruptcy Judge J. Kate Stickles had previously warned that time was running out to secure a viable solution.
Future Outlook
If approved, the deal with Gordon Brothers and Variety Wholesalers could ensure the continuity of Big Lots as a recognizable brand in the discount retail sector, albeit on a smaller scale.
The case, Big Lots Inc., number 24-11967, is being overseen in the U.S. Bankruptcy Court for the District of Delaware.
This agreement not only saves a significant number of stores but also offers hope for employees and customers alike, keeping Big Lots alive in a challenging retail environment.
Is Big Lots Going Out of Business?
Big Lots is not going entirely out of business, but the company is undergoing significant restructuring after filing for Chapter 11 bankruptcy in September 2024. Here’s the current situation:
What’s Happening?
- Big Lots initially planned to liquidate and close most of its stores after a failed deal to sell the business to Nexus Capital Management LP.
- The company has since struck a new deal with Gordon Brothers Retail Partners LLC and Variety Wholesalers Inc. to save hundreds of stores.
- Variety Wholesalers plans to acquire between 200 and 400 locations, which will continue to operate under the Big Lots brand.
Will All Stores Close?
No, not all stores will close. However, approximately 870 stores had already begun liquidation sales. The new deal focuses on preserving as many locations as possible, meaning some stores will remain open and operational.
What Does This Mean for Customers?
- If your local store is among the ones being saved, it will continue to operate as a Big Lots.
- For stores undergoing liquidation, sales will continue until inventory is cleared, after which those locations will close permanently.
What’s Next?
The deal must be approved by a bankruptcy court, with the next hearing scheduled soon. If the agreement moves forward, Big Lots will continue operating a smaller footprint of stores under new ownership.
While Big Lots isn’t fully going out of business, it is significantly downsizing to focus on a leaner and more sustainable model.
