Big Lots, the Ohio-based big box discount retailer with nearly 1,400 stores nationwide, is planning to close up to 315 stores in some three dozen states as persistently high inflation has kept customers away — putting the company in danger of bankruptcy.
The company submitted a filing with the Securities and Exchange Commission outlining the updated terms of a loan agreement with PNC Bank.
The initial agreement called for the closure of up to 150 stores while the amended agreement stipulated that it may need to shutter double that number in light of ongoing financial difficulties.
Big Lots, whose business model is predicated on acquiring overstock and closeout merchandise from other retailers at a lower cost and then re-selling them at discount rates, informed the SEC that the amended terms include a reduced credit limit as well as higher interest rates on its credit line.
Last month, the company told the SEC in a separate filing that it would shutter between 35 and 40 stores by the end of the year.
“In 2024, the US economy has continued to face macroeconomic challenges including elevated inflation, which has adversely impacted the buying power of our customers,” Big Lots said in the filing.
Big Lots reported that its first quarter sales fell by 10% compared to the previous year. The company also submitted a filing with the SEC showing that its long-term debt increased by $72.2 million.
The burgeoning debt means that Big Lots may not be able to pay back its creditors, “which raises substantial doubt about the company’s ability to continue as a going concern.”
In its notice to the SEC, the company cited “elevated inflation” as the key factor that has impeded customers’ ability to shop for its goods.
On its web site, the company listed 293 locations that it planned to shutter — 73 of them in California; 21 in Arizona; 18 in Washington State; 25 in Florida; and eight in its home state of Ohio.
In March 2021, the company’s stock reached an all-time high of around $72 a share. As of Wednesday, Big Lots shares could be had for $1.04 apiece — a 98% decrease.
The recent economic environment has been inhospitable for brick-and-mortar retailers.
Walgreens recently announced it may close up to 2,000 stores amid plunging retail sales, while Red Lobster abruptly shut dozens of locations last month and then filed for bankruptcy.
Drugstore rivals CVS and Rite Aid have also announced impending store closures this year, along with retailers Macy’s, Walmart and Foot Locker.
