Big Lots is facing significant challenges, revealing plans to close around 300 stores, primarily impacting California, where 75 of its 109 locations will shut down. In a recent filing with the Securities and Exchange Commission, the retailer indicated it may shutter up to 315 stores due to revised credit and loan terms. Previously, it projected closures of 35 to 40 stores in 2024, reflecting a broader strategy to manage its financial pressures.
The company, which operates approximately 1,390 stores nationwide, has seen a troubling decline in its performance. Sales fell by 10.2%, with revenues dropping to $1 billion in the first quarter ending May 4, as reported by CEO Bruce Thorn. He attributed the downturn to reduced consumer spending on discretionary items, which has further strained Big Lots’ operational liquidity.
Under new financial terms, Big Lots’ available credit has been cut to $800 million from $900 million, while borrowing rates have increased. The company has made clear that compliance with credit covenants may become increasingly difficult in light of ongoing operating losses. While it currently meets its credit agreements, the outlook suggests continued financial instability.
This strategy of downsizing could serve as a cautionary tale for discount retailers seeking to navigate these turbulent economic times. With competition intensifying and consumer behavior evolving, retailers must adapt to the changing retail landscape to survive.