Discount retailer Big Lots is set to close 35 to 40 stores around the country as it contends with deteriorating financial conditions and a challenging consumer market.
Big Lots President and CEO Bruce Thorn addressed the situation in the latest earnings report. The chain has 27 locations in New Jersey, among them Sicklerville, Cherry Hill and Glassboro. It would not specify which locations would close.
“We remain focused on managing through the current economic cycle by controlling the controllables,” he said. “As we move forward, we’re taking aggressive actions to drive positive comp sales growth in the latter part of the year and into 2025, and to maintain year-over-year gross margin rate improvements.”
Thorn noted that approximately 70% of Big Lots’ stores have “healthy unit economics.” But he acknowledged that “there are still a significant number of underperforming stores that we are working hard to address.”
In a filing with the U.S. Securities and Exchange Commission, Big Lots reported that it had 1,392 operating stores at the start of 2024, down from 1,425 in the first quarter of last year.
“In 2024, the U.S. economy has continued to face macroeconomic challenges, including elevated inflation, which has adversely impacted the buying power of our customers,” the filing stated.
Like many retailers, Big Lots has struggled with declining sales amid rising prices and reduced consumer spending. The chain’s financial disclosure revealed a 10.2% drop in sales between the first quarters of 2023 and 2024, equating to a loss of about $114.5 million.
The company also incurred an additional $72.2 million in debt, increasing its total debt from $501.6 million in the first quarter of 2023 to $573.8 million in the first quarter of 2024. That financial strain has led to “substantial doubt” about the company’s ability to continue operations, sparking speculation about a potential bankruptcy filing.
Should the company file for bankruptcy, it would join the ranks of other restaurant and retail chains that have had downturns since COVID, including Red Lobster, Rite Aid, Bed Bath & Beyond, and Christmas Tree Shops. Other retailers that have announced plans to eliminate underperforming locations include Walgreens, J.C. Penney and Disney stores.
