BIG LOTS, INC. ENTERS INTO SALE AGREEMENT WITH NEXUS CAPITAL MANAGEMENT LP
Big Lots, Inc. (NYSE: BIG) has entered into a sale agreement with Nexus Capital Management LP to acquire its assets and operations. The company has initiated voluntary Chapter 11 proceedings to facilitate the transaction and restructuring initiatives. Big Lots secured $707.5 million in financing, including $35 million in new financing, to support operations during the process. The company plans to optimize its store footprint by closing additional locations and evaluating its distribution center model. Despite challenges, Big Lots reported Q2 2024 results in line with guidance, with improved underlying comp sales and gross margins. The company expects positive momentum to continue in the second half of the year. Big Lots also received a NYSE non-compliance notice due to its average closing share price falling below $1.00 over 30 consecutive trading days.
Big Lots, Inc. (NYSE: BIG) ha firmato un contratto di vendita con Nexus Capital Management LP per acquisire i suoi asset e operazioni. La società ha avviato una procedura di Chapter 11 volontaria per facilitare la transazione e le iniziative di ristrutturazione. Big Lots ha ottenuto 707,5 milioni di dollari in finanziamenti, di cui 35 milioni in nuovi finanziamenti, per sostenere le operazioni durante il processo. L'azienda prevede di ottimizzare la sua presenza sul mercato chiudendo ulteriori negozi e valutando il suo modello di centro di distribuzione. Nonostante le difficoltà, Big Lots ha riportato risultati del secondo trimestre 2024 in linea con le previsioni, con un miglioramento delle vendite comparabili e dei margini lordi. L'azienda si aspetta che il momento positivo continui nella seconda metà dell'anno. Big Lots ha anche ricevuto un avviso di non conformità dalla NYSE a causa del calo del prezzo medio delle azioni al di sotto di 1,00 dollaro per 30 giorni di negoziazione consecutivi.
Big Lots, Inc. (NYSE: BIG) ha firmado un acuerdo de venta con Nexus Capital Management LP para adquirir sus activos y operaciones. La compañía ha iniciado un procedimiento de Capítulo 11 voluntario para facilitar la transacción y las iniciativas de reestructuración. Big Lots aseguró 707.5 millones de dólares en financiamiento, incluyendo 35 millones en nuevo financiamiento, para apoyar las operaciones durante el proceso. La empresa planea optimizar su presencia en el mercado cerrando más ubicaciones y evaluando su modelo de centro de distribución. A pesar de los desafíos, Big Lots reportó resultados del segundo trimestre de 2024 en línea con las expectativas, con mejoras en las ventas comparables y márgenes brutos. La compañía espera que el impulso positivo continúe en la segunda mitad del año. Big Lots también recibió un aviso de incumplimiento de NYSE debido a que su precio promedio de acciones cerró por debajo de 1.00 dólar durante 30 días de negociación consecutivos.
Big Lots, Inc. (NYSE: BIG)는 Nexus Capital Management LP와 판매 계약을 체결하여 자산과 운영을 인수합니다. 이 회사는 거래 및 구조조정 이니셔티브를 용이하게 하기 위해 자발적인 챕터 11 절차를 시작했습니다. Big Lots는 이 과정에서 운영을 지원하기 위해 7억 7천5백만 달러의 자금 조달을 확보했으며, 그 중 3천5백만 달러는 신규 자금입니다. 이 회사는 매장 규모 최적화를 위해 추가 지점을 폐쇄하고 배급 센터 모델을 평가할 계획입니다. 어려움에도 불구하고 Big Lots는 2024년 2분기 실적이 안내에 부합한다고 보고했으며, 개선된 기본 비교 매출 및 총 마진을 기록했습니다. 회사는 하반기에 긍정적인 momentum이 계속될 것으로 예상하고 있습니다. Big Lots는 또한 평균 종가가 30일 연속 거래일 동안 1.00 달러 이하로 떨어져 NYSE 불이행 통지서를 받았습니다.
Big Lots, Inc. (NYSE: BIG) a signé un accord de vente avec Nexus Capital Management LP pour acquérir ses actifs et opérations. L'entreprise a engagé une procédure de Chapter 11 volontaire pour faciliter la transaction et les initiatives de restructuration. Big Lots a sécurisé 707,5 millions de dollars de financement, dont 35 millions de nouveaux financements, pour soutenir ses activités pendant ce processus. L'entreprise prévoit d'optimiser son empreinte de magasins en fermant des emplacements supplémentaires et en évaluant son modèle de centre de distribution. Malgré les défis, Big Lots a rapporté des résultats du Q2 2024 conformes aux prévisions, avec des ventes comparables sous-jacentes et des marges brutes améliorées. La société s'attend à ce que cet élan positif se poursuive dans la seconde moitié de l'année. Big Lots a également reçu un avis de non-conformité de la NYSE en raison de la baisse de son prix moyen d'action en dessous de 1,00 dollar pendant 30 jours de bourse consécutifs.
Big Lots, Inc. (NYSE: BIG) hat einen Verkaufvertrag mit Nexus Capital Management LP geschlossen, um deren Vermögenswerte und Geschäftsabläufe zu erwerben. Das Unternehmen hat freiwillige Chapter 11-Verfahren eingeleitet, um die Transaktion und Umstrukturierungsinitiativen zu erleichtern. Big Lots sicherte sich 707,5 Millionen Dollar an Finanzierung, einschließlich 35 Millionen Dollar an neuer Finanzierung, um die Betriebe während des Prozesses zu unterstützen. Das Unternehmen plant, seine Filialen zu optimieren, indem es weitere Standorte schließt und sein Distributionszentrenmodell evaluiert. Trotz der Herausforderungen berichtete Big Lots über Q2 2024 Ergebnisse im Einklang mit den Prognosen, mit verbesserten zugrunde liegenden vergleichenden Verkäufen und Bruttomargen. Das Unternehmen erwartet, dass die positive Dynamik in der zweiten Jahreshälfte anhält. Big Lots erhielt auch eine NYSE-Nichtkonformitätsbenachrichtigung, da der durchschnittliche Schlusskurs der Aktie über 30 aufeinanderfolgende Handelstage unter 1,00 USD gefallen ist.
- Secured $707.5 million in financing to support operations during restructuring
- Q2 2024 results in line with guidance, with improved underlying comp sales and gross margins
- Positive momentum expected to continue in the second half of the year
- Sale agreement with Nexus Capital Management LP to acquire assets and operations
- Initiated voluntary Chapter 11 proceedings
- Plans to close additional store locations
- Received NYSE non-compliance notice due to low share price
- Core customers curbed discretionary spending, affecting revenue
Insights
Big Lots' decision to file for Chapter 11 bankruptcy and sell to Nexus Capital Management marks a significant turning point for the struggling retailer. The $707.5 million DIP financing, including $35 million in new funds, should provide short-term liquidity. However, the planned store closures and operational restructuring indicate substantial challenges ahead.
The company's Q2 performance aligning with guidance and reported improvements in Q3 offer a glimmer of hope. Yet, the NYSE non-compliance notice due to share price falling below
Big Lots' restructuring reflects broader trends in the discount retail sector. The company's struggles, attributed to macroeconomic factors like high inflation and interest rates, highlight the vulnerability of retailers targeting price-sensitive consumers. The planned optimization of store footprint and distribution center model is important but comes with execution risks.
The focus on "extreme bargains" could differentiate Big Lots in a crowded market, potentially attracting deal-seeking consumers. However, this strategy may pressure margins and requires efficient inventory management. The success of this transition under Nexus' ownership will depend on their ability to rapidly implement changes while maintaining customer loyalty during a turbulent period.
The Chapter 11 filing and "stalking horse" bid from Nexus provide Big Lots with a structured path for restructuring and potential revival. This process offers protection from creditors while allowing for operational reorganization. The court-supervised auction could potentially attract higher bids, maximizing value for stakeholders.
Key legal aspects to monitor include:
- Approval of DIP financing and first-day motions
- Treatment of existing contracts and leases
- Potential objections from creditors or shareholders
Implements Plan to Accelerate Business Optimization and Achieve Profitability in 2025
Initiates Voluntary Chapter 11 Process to Facilitate Restructuring Initiatives and Ownership Transition
Company Secures Interim Financing to Support Operations
Customers Will Continue to Find Unmistakable Value and Extreme Bargains In-Store and Online
Q2 Results In Line With Guidance
Bruce Thorn, President and Chief Executive Officer, said, "We are proud of the work we do every day across Big Lots to provide our customers with unmistakable value and exceptional savings, as well as building stronger communities through our philanthropic efforts. The actions we are taking today will enable us to move forward with new owners who believe in our business and provide financial stability, while we optimize our operational footprint, accelerate improvement in our performance, and deliver on our promise to be the leader in extreme value."
Mr. Thorn continued, "We appreciate the tremendous loyalty of our customers, and our core purpose of helping them 'Live BIG and Save LOTS' has never been stronger. As we move through this process, we remain committed to offering extreme bargains, enabling easy shopping in our stores and online, and providing an outstanding customer experience. We are grateful for the hard work and dedication of our associates who remain focused on delivering the best service possible for our valued customers, and we deeply appreciate the partnership of our vendors as we start a new chapter for our business."
Evan Glucoft, Managing Director of Nexus, said, "We are excited to have the opportunity to partner with Big Lots and help return this iconic brand to its status as America's leading extreme value retailer. The Big Lots business has incredible potential and we are confident that its greatest days are ahead."
Since the pandemic, Big Lots has taken steps to accelerate its strategic initiatives focused on improving sales and boosting its long-term performance and profitability. Like many other retail businesses, the Company has been adversely affected by recent macroeconomic factors such as high inflation and interest rates that are beyond its control. The prevailing economic trends have been particularly challenging to Big Lots, as its core customers curbed their discretionary spending on the home and seasonal product categories that represent a significant portion of the Company's revenue.
While the Company's underlying performance has been improving, the Board of Directors conducted a broad strategic review of alternatives and determined that entering into the Sale Agreement with Nexus, and initiating a court-supervised sale process, is the best path forward to maximize value and ensure continued operations.
Ongoing Optimization of Go-Forward Store Footprint
As part of the court-supervised sale process, the Company is continuing to assess its operational footprint, which will include closing additional store locations. The Company will also continue to evaluate and optimize its distribution center model.
Mr. Thorn added, "Though the majority of our store locations are profitable, we intend to move forward with a more focused footprint to ensure that we operate efficiently and are best positioned to serve our customers. To accomplish this, we intend to use the tools afforded by this process to continue optimizing our store fleet in an orderly manner."
Additional Information About the Court-Supervised Process
Under the terms of the Sale Agreement, Nexus will serve as the "stalking horse bidder" in a court-supervised auction process pursuant to section 363 of the
In connection with the court-supervised process, Big Lots has secured commitments for
The Company has also filed a number of customary motions seeking Court approval to continue supporting its operations, including continued payment of employee wages and benefits, and payments to certain critical vendors in the ordinary course of business. The Company anticipates receiving Court approval for these requests and expects to pay vendors in full under normal terms for any goods and services provided after the filing.
Additional information regarding the Company's restructuring and sale process is available at a dedicated website, bigstepforbiglots.com. Court filings and other information related to the proceedings, including how to file a proof of claim, are available on a separate website administrated by the Company's claims agent, Kroll Restructuring Administration LLC, at https://cases.ra.kroll.com/biglots, by calling toll-free at (844) 217-1398 (or +1 (646) 809-2073 for calls originating outside of the
Second Quarter 2024 Preliminary Results
Turning to the Company's second quarter 2024 performance, Mr. Thorn stated, "Despite a challenging consumer environment and financial pressures facing our business, we are pleased to have achieved underlying comp sales, gross margin, and operating expenses in line with our guidance. Underlying comp sales improved sequentially relative to Q1 on a year-over-year basis and gross margins significantly improved, driven in part by advancing our five key actions, particularly through increasing our extreme bargain offerings. Additionally, Q3 to date is off to a good start, with a significant sequential improvement in underlying comp sales relative to Q2, as well as underlying gross margin expansion versus last year. We expect the positive momentum to continue into the back half of the year."
The Company will report full second quarter results as part of its upcoming 10-Q filing, which is due to be filed on September 12, 2024.
New York Stock Exchange Notice
The Company also announced today that it was notified by the New York Stock Exchange (the "NYSE") that it is not in compliance with Section 802.01C of the NYSE Listed Company Manual because the average closing price of the Company's common shares was less than
Advisors
Davis Polk & Wardwell LLP is serving as legal counsel, Guggenheim Securities, LLC is serving as financial advisor, AlixPartners LLP is serving as restructuring advisor, and A&G Real Estate Partners is serving as real estate advisor to the Company. Kirkland & Ellis is serving as legal counsel to Nexus.
About Big Lots, Inc.
Big Lots is one of the nation's largest closeout retailers focused on extreme value. The Company is dedicated to being the big difference for a better life by delivering bargains to brag about on everything for the home, including furniture, décor, pantry and more. It fulfills its mission to help customers "Live BIG and Save LOTS" with sourcing strategies to grow extreme bargains through closeouts, liquidations, overstocks, private labels, and value-engineered products. The Big Lots Foundation, together with the Company's customers, associates, and vendors, has delivered more than
Cautionary Statement Concerning Forward-Looking Statements
Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and such statements are intended to qualify for the protection of the safe harbor provided by the Act. The words "anticipate, "estimate," "continue," "could," "approximate," "expect," "objective," "goal," "project," "intend," "plan," "believe," "will," "should," "may," "target," "forecast," "guidance," "outlook" and similar expressions generally identify forward-looking statements. Similarly, descriptions of our objectives, strategies, plans, goals or targets are also forward-looking statements. Forward-looking statements relate to the expectations of management as to future occurrences and trends, including statements expressing optimism or pessimism about future operating results or events and projected sales, earnings, capital expenditures and business strategy. Forward-looking statements are based upon a number of assumptions concerning future conditions that may ultimately prove to be inaccurate. Forward-looking statements are and will be based upon management's then-current views and assumptions regarding future events and operating performance and are applicable only as of the dates of such statements. Although we believe the expectations expressed in forward-looking statements are based on reasonable assumptions within the bounds of our knowledge, forward-looking statements, by their nature, involve risks, uncertainties and other factors, any one or a combination of which could materially affect business, financial condition, results of operations or liquidity.
Forward-looking statements that we make herein and in other reports and releases are not guarantees of future performance and actual results may differ materially from those discussed in such forward-looking statements as a result of various factors, including, but not limited to, the current economic and credit conditions, inflation, the cost of goods, our inability to successfully execute strategic initiatives, competitive pressures, economic pressures on our customers and us, the availability of brand name closeout merchandise, trade restrictions, freight costs, the risks discussed in the Risk Factors section of our most recent Annual Report on Form 10-K, and other factors discussed from time to time in other filings with the SEC, including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. This release should be read in conjunction with such filings, and you should consider all of these risks, uncertainties and other factors carefully in evaluating forward-looking statements.
You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our public announcements and SEC filings.
Media Contact:
Aaron Palash / Richard M. Goldman
Joele Frank, Wilkinson Brimmer Katcher
BigLotsMedia@joelefrank.com
212-355-4449
Investor Contact:
Alvin Concepcion
Investor_Relations@biglots.com
614-278-2705
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SOURCE Big Lots, Inc.
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