Ohio-based discount retailer Big Lots, which operates about 1,400 stores nationwide, plans to close up to 315 stores in about 30 states as prolonged high inflation drives away customers and puts the company on the brink of bankruptcy.
The company filed documents with the Securities and Exchange Commission outlining the terms of its renewed loan agreement with PNC Bank.
The original agreement called for the closure of up to 150 stores, but the revised agreement stipulates that the company may have to close twice that number of stores in light of its continuing financial difficulties.
Big Lots, whose business model involves buying excess inventory and clearance items from other retailers at low prices and reselling them at a discount, notified the SEC that the revised terms include lowering credit limits and increasing interest rates on the credit lines.
The company said in a separate SEC filing last month that it plans to close 35 to 40 stores by the end of the year.
“In 2024, the U.S. economy continues to face macroeconomic challenges, including rising inflation, which is negatively impacting our customers’ purchasing power,” Big Lots said in the filing.
Big Lots reported that first-quarter sales were down 10% from a year ago. The company also filed documents with the SEC showing a $72.2 million increase in long-term debt.
The company said its ballooning debt load means Big Lots may not be able to repay its creditors, “which raises significant doubts about the company’s ability to continue as a going concern.”
In its notice to the SEC, the company cited “high inflation” as the main factor preventing customers from purchasing its products.
The company lists 293 stores it plans to close on its website, including 73 in California, 21 in Arizona, 18 in Washington state, 25 in Florida and eight in Ohio, where it is headquartered.
The company’s stock price hit an all-time high of about $72 per share in March 2021. As of Wednesday, Big Lots stock could be purchased for $1.04 per share, down 98%.
The current economic environment has been tough for brick-and-mortar retailers.
Walgreens recently announced it could close up to 2,000 stores due to plummeting retail sales, while Red Lobster abruptly closed dozens of stores last month and then filed for bankruptcy.
Drugstore rivals CVS and Rite Aid have also announced plans to close stores this year, along with retailers Macy’s, Walmart and Foot Locker.
