HERCULES, CALIFORNIA – JUNE 07: A sign is posted in front of a Big Lots store on June 07, 2024 in … [+]
Gordon Brothers Retail Partners has just thrown a lifeline to closeout retailer Big Lots after a previous deal with Nexus Capital Management to acquire the company fell through.
Before Gordon Brothers stepped in, Big Lots announced it was forced to close all 900 stores. Now between 200 and 400 Big Lots stores will live to see another day.
“Good news on the retail jobs front this morning,” Neil Saunders, managing director of GlobalData Retail, posted on LinkedIn. “Big Lots, which filed for bankruptcy in September, has reached an agreement with Gordon Brothers Retail Partners to keep hundreds of stores open and save thousands of jobs.”
Gordon Brothers, which was handling Big Lots’ going-out-of-business sale, has agreed to buy all Big Lots assets, including stores, distribution centers and intellectual property, which it plans to sell along to other retailers and companies.
And it has secured the first buyer. Variety Wholesalers will acquire between 200 and 400 Big Lots stores along with two distribution centers. Those stores will continue to carry the Big Lots banner going forward.
“The strategic sale to Gordon Brothers and the transfer to Variety Wholesalers is a favorable and significant achievement for Big Lots,” Big Lot’s president and CEO said in a statement.
“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,” he continued.
This agreement is subject to approval by the bankruptcy court and other customary closing conditions.
Variety Wholesalers
Currently, Variety operates some 400 stores in the Southeast and Mid-Atlantic regions. It’s primarily known for its Roses Discount Stores and Roses Express stores, but also operates Bargain Town, Super 10, Bill’s Dollar Stores and Maxway.
At this time, Variety hasn’t indicated which stores will remain open, but one can assume they will be located in the regions where it already plays.
Variety also plans to keep on current employees at the stores which will remain open, as well as bring over some essential corporate staff to keep its Big Lots operations going. Currently Big Lots has some 27,000 employees, but the number that will transfer to Variety hasn’t been determined.
Given Variety’s bargain positioning, it looks like the Big Lots brand has found a fitting home.
“We are pleased to reach this strategic agreement with Big Lots and partner with Variety Wholesalers to achieve a path forward that allows Big Lots to continue to serve customers with extreme bargains and an outstanding shopping experience,” said Rick Edwards, Gordon Brothers head of North America retail. His company is also handling the closeout sale for the 700 Party City locations.
With this announcement, Variety’s president and CEO Lisa Seigies virtually doubles her span of control. She’s been with the company for six years rising to the top after serving as the company’s chief merchandising officer.
She got her start in retail with Federated, now Macy’s, and also worked with Martha Stewart Living Omnimedia, Ross Stores and Stage Stores among others.
Big Lots’ Leftovers
In its most recent first quarter earnings report ending May 4, it reported sales down 10% to $1 billion and a net loss of $205 million. It ended its last fiscal year off 14% to $4.7 billion after closing 500 stores in association with the September bankruptcy.
At the close of the first quarter, it held $950 million in inventory, $4 million in cash and $574 million in long-term debt
Rather than reporting earnings for the second quarter, it filed bankruptcy instead. At that time it listed assets and liabilities in the range of $1 billion to $10 billion and named between 5,001 to 10,000 creditors owed, according to Seeking Alpha.
Hopefully, Gordon Brothers has another buyer or two up its sleeve to save more of the Big Lots brand, but its got a good head start.
“This at least gives Big Lots a chance at survival in some form. Although a lot of changes will be needed to optimize a proposition that, frankly, was well below par before bankruptcy,” GlobalData’s Saunders concluded.
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