The retail landscape witnessed a dramatic turn of events as Big Lots, a prominent closeout retailer, teetered on the brink of complete closure before securing a last-minute rescue. Initially slated to shutter all 900 stores following a failed acquisition deal with Nexus Capital Management, Big Lots found an unexpected lifeline in Gordon Brothers Retail Partners. This intervention averted a complete collapse, paving the way for the survival of between 200 and 400 Big Lots stores, preserving thousands of jobs in the process. The news was met with optimism by industry analysts, signaling a potential reprieve for the struggling retailer.
Gordon Brothers, initially tasked with managing Big Lots’ going-out-of-business sale, transitioned into the role of acquirer. The firm purchased all of Big Lots’ assets, encompassing stores, distribution centers, and intellectual property, with the intention of subsequently selling these assets to other retailers and businesses. Acting swiftly, Gordon Brothers secured Variety Wholesalers as the first buyer, ensuring the continuation of the Big Lots brand. Variety Wholesalers will acquire a substantial portion of the Big Lots portfolio, including between 200 and 400 stores and two distribution centers. These acquired stores will continue to operate under the familiar Big Lots banner.
The acquisition deal, while promising, remains contingent on bankruptcy court approval and customary closing conditions. However, it represents a significant development for Big Lots, offering a viable path toward preserving jobs, maximizing the value of the estate, and ensuring the continuity of the brand. This outcome is seen as a positive turn of events, providing a glimmer of hope for Big Lots amidst its financial struggles. The agreement marks a crucial step towards stabilizing the company and charting a course for its future.
Variety Wholesalers, a regional retail player with a strong presence in the Southeast and Mid-Atlantic regions, emerges as a fitting partner for Big Lots. Operating approximately 400 stores under various banners, including Roses Discount Stores, Roses Express, Bargain Town, Super 10, Bill’s Dollar Stores, and Maxway, Variety Wholesalers has established itself in the discount retail segment. While the specific Big Lots stores slated to remain open are yet to be announced, it is anticipated that they will primarily be located within Variety Wholesalers’ existing operational footprint. Variety Wholesalers plans to retain existing Big Lots employees at the continuing stores and integrate some essential corporate staff to ensure the smooth operation of the acquired Big Lots business.
This acquisition significantly expands Variety Wholesalers’ reach and market presence, nearly doubling the number of stores under its control. Lisa Seigies, president and CEO of Variety Wholesalers, will oversee this broadened portfolio, leveraging her extensive retail experience. Seigies’ career trajectory includes stints at Federated (now Macy’s), Martha Stewart Living Omnimedia, Ross Stores, and Stage Stores, providing her with a diverse background in merchandising and retail management. This acquisition positions Variety Wholesalers for continued growth and strengthens its position in the discount retail market.
Leading up to the bankruptcy filing, Big Lots faced persistent financial challenges. The company reported declining sales and substantial net losses in its most recent earnings reports. In the first quarter ending May 4, sales dropped by 10% to $1 billion, resulting in a net loss of $205 million. The previous fiscal year concluded with a 14% decline in sales to $4.7 billion, accompanied by the closure of 500 stores. At the end of the first quarter, Big Lots held $950 million in inventory, $4 million in cash, and $574 million in long-term debt. These financial difficulties ultimately led to the bankruptcy filing, with reported assets and liabilities ranging from $1 billion to $10 billion and a creditor list numbering between 5,001 and 10,000.
While the acquisition by Variety Wholesalers marks a significant step towards the revitalization of Big Lots, the future of the remaining stores hangs in the balance. Gordon Brothers is actively seeking additional buyers to absorb more of the Big Lots brand, but the success of this endeavor remains uncertain. Industry experts acknowledge the challenges ahead, emphasizing the need for significant operational improvements to optimize Big Lots’ proposition, which was deemed subpar even before the bankruptcy. The fate of the remaining Big Lots stores and the long-term viability of the brand will depend on the successful execution of a turnaround strategy and the ability to attract further investment.
