The Ohio-based chain revealed in its first-quarter financial report for fiscal year 2024 that there is "substantial doubt" about its ability to continue operating. This uncertainty stems from a combination of rising costs, challenging economic conditions, inflation and difficulties in executing its business strategies. For the first quarter, Big Lots reported a net loss of $205 million.
CEO Bruce Thorn said sales have been below expectations. He attributed this to reduced spending by core customers, especially on higher-priced items, amid economic pressures.
To improve its financial situation, Big Lots implemented cost-cutting measures and other strategies to enhance its liquidity. Despite these efforts, the company warned that it might not be able to meet the terms of its credit agreements based on its current cash flow projections.
The company’s stock price fell to 55 cents on Aug. 29 – representing a 40 percent drop from the previous day's close. This sharp decline reflects broader concerns about inflation, interest rates, unemployment and weakening consumer confidence, which have all impacted Big Lots' customer base. Additionally, rising credit card debt and decreasing savings rates suggest that consumers are facing increasing financial strain.
Big Lots is set to announce its second-quarter financial results on Sept. 6. If the company files for bankruptcy, it would be the second retailer based in Columbus, Ohio, to do so this year – following the fashion retailer Express. This move would also contribute to a broader trend of store closures in the U.S., with nearly 8,000 locations expected to shut down by the end of 2024, including major chains, like Macy’s, Dollar Tree and Rite Aid. (Related: BIDENOMICS claims another victim: Retail store chain Bob's Stores to close down all locations by July 14.)
Big Lots to shut down over 300 locations nationwide
Big Lots has been hit hard by a slowdown in home goods spending – similar to other retailers, like Conn's Inc. and LL Flooring Holdings Inc., which both filed for bankruptcy earlier this year.
The retailer began this year with nearly 1,400 stores across the United States. However, over 300 of its locations are currently listed on its website as closing, with sales promotions, such as 20 percent off in states, like Connecticut, Massachusetts, Michigan, New Hampshire and Vermont.
The company has stated that it will provide support to employees affected by these closures, including options to transfer to other locations or receive severance pay if they cannot move.
Stores in 36 states are expected to shut down. A record 75 stores in California will be shutting down, while Big Lots will only be closing one store each in Alabama, Arkansas, Maine, Minnesota, New Hampshire, Nevada, New Jersey, South Dakota and Wyoming.
Learn more about the deteriorating state of the American economy at EconomicRiot.com.
Watch the following video discussing in detail how Big Lots is on the brink of bankruptcy.
This video is from the Daily Videos channel on Brighteon.com.
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