Retail Bankruptcy and Closures

Big Lots isn’t going away, after all. The discount retailer has announced a pivotal sale transaction with Gordon Brothers Retail Partners, LLC, marking a significant step in the company's efforts to stabilize its operations amid financial challenges. 

Under the agreement, Big Lots will transfer its assets, including its stores, distribution centers, and intellectual property, to other retailers, notably Variety Wholesalers, Inc. This strategic move aims to preserve the Big Lots brand and secure jobs for its employees.

Variety Wholesalers, a company that operates over 400 retail stores across the Southeast and Mid-Atlantic states, plans to acquire between 200 and 400 Big Lots stores. These stores will continue to operate under the Big Lots brand, ensuring continuity for customers and employees alike. 

Additionally, Variety Wholesalers intends to acquire up to two distribution centers and may employ Big Lots associates at these locations, as well as certain corporate staff essential for supporting the ongoing operations.

‘Favorable and significant achievement’ 

"The strategic sale to Gordon Brothers and the transfer to Variety Wholesalers is a favorable and significant achievement for Big Lots that reflects the tireless work and collective effort of our team,” said Big Lots CEO Bruce Thorn. “This sale agreement and transfer present the strongest opportunity to preserve jobs, maximize value for the estate and ensure continuity of the Big Lots brand."

Rick Edwards, head of North America Retail at Gordon Brothers Retail Partners, echoed this sentiment, highlighting the partnership's potential to maintain Big Lots' reputation for offering extreme bargains and an outstanding shopping experience.

The change in fortune pulls the discount brand back from the brink of extinction. In August, Big Lots announced it would close 300 stores after previously saying only 40 locations would be shuttered. The announced closings were estimated to shrink the chain’s footprint by 21%.

December setback

However, in mid-December hopes were dashed when Big Lots announced it no longer expected to finalize its previously announced asset purchase agreement with Nexus Capital Management. With that avenue closed, the company announced its stores would launch going-out-of-business sales as it wound down operations.

With the new deal, Lisa Seigies, CEO of Variety Wholesalers, expressed enthusiasm about the future.

"We are excited to partner with Gordon Brothers to provide a path forward for the Big Lots brand and hundreds of its stores,” she said. We look forward to working with members of the Big Lots team to realize the exciting opportunities ahead."

The transaction is pending approval by the bankruptcy court and is subject to customary closing conditions. 

The Container Store is the latest retailer to file for bankruptcy.

The company said that the shopping process will remain unchanged for consumers throughout the bankruptcy process; however, the retailer has experienced declining sales for the last few years, and it’s finally come to a head. 

The retailer explained that 90% of its lenders have agreed to the bankruptcy process, and the company expects to wrap everything up in the next 35 days. In addition, the company’s lenders have agreed to invest $40 million into The Container Store, which will help lower debt obligations.

Things aren’t changing for consumers, employees

With over 100 stores across the country, consumers can expect their shopping experience to remain relatively unchanged. Stores will remain open during the bankruptcy process, and shoppers will also be able to make online orders and schedule in-home organization services. 

Additionally, employees can expect to retain their positions, their paychecks and all benefits. 

Despite the financial issues, representatives from the company are confident that the retailer will bounce back stronger. 

“The Container Store is here to stay. Our strategy is sound, and we believe the steps we are taking today will allow us to continue to advance our business, deepen customer relationships, expand our reach, and strengthen our capabilities,” said Satish Malhotra, CEO of The Container Store. 

“We are particularly excited about the future of our custom space offerings, which continue to demonstrate strength. I want to thank our incredibly talented employees for their continued dedication, our customers, partners, and vendors for their support, and our lenders who clearly see the strong potential in our business. We intend to maintain our strong workforce and remain committed to delivering an exceptional experience for our customers while we execute this recapitalization and for many years to come.”

On the heels of Big Lots’ announcement that it’s going out of business, Party City said it’s taking the same path, liquidating assets and closing all stores by the end of February.

In October 2023, Party City emerged from bankruptcy with a turnaround plan. But revenue fell far short of expectations and the company will close all 700 of its stores.

"The decision was made following exhaustive efforts by the company to find a path forward that would allow continued operations in an immensely challenging environment driven by inflationary pressures on costs and consumer spending, among other factors," the company said in a statement.

The company is using going out of business sales to reduce its inventory of party supplies. The Party City website reports everything has been marked down by 50%.

The company said the bankruptcy process helped it reduce its debt to $1 billion, but that in the current economic environment that was still too much. Like some dollar stores, Party City struggled to sell its largely discretionary goods to consumers struggling with inflation.

Party City’s fate mirrors that of Big Lots, and in some communities that’s brought home when both retailers have outlets in the same shopping center. In Green Bay, Wisc., both stores are currently present in the Green Bay Shopping Plaza. Fox 11 reports both stores were holding going-out-of-business sales over the weekend.