What Led to Big Lots’ Chapter 11 Bankruptcy Filing?

McMillanDoolittle’s Amanda Lai discussed key factors that contributed to Big Lots’ recent Chapter 11 announcement in an interview with PYMNTS.

• A Challenging Market. The Big Lots’ Chapter 11 “announcement underscores the immense economic pressures faced by retailers as Americans continue to pull back on discretionary spending to focus on essentials. Big Lots leans heavily into discretionary categories like furniture, home decor and apparel which have faced slowdowns in spending.”
• Underperformer Against Value Competitors. According to Lai, “Big Lots has long been losing the battle against value retailers, as it continues to underperform other deep discounter competitors like Ollie’s Bargain Outlet and price-focused retailers like Aldi and Walmart who continue to post positive results.”
• Slow to Introduce Grocery. Among areas where Big Lots was falling behind competitors, “Big Lots was slow to invest in the grocery category and faces fierce competition in this category against players like Aldi and Walmart who have slashed prices on hundreds of grocery items. In Q1, the food category was the second smallest sales category. Furniture was their largest category in terms of sales.”
• Anticipated Consolidation Ahead. Last year, Big Lots completed a leaseback agreement for 22 owned stores, a distribution center, and its headquarters. “We can expect the company to continue consolidating its real estate portfolio and pull back on store openings as it tries to improve its financial position.”

Read the full PYMNTS article here. Contact us to discuss strategies for navigating the economic uncertainty and differentiating yourself in a crowded field of retail competitors.