Distressed retailer closes more stores in Chapter 11 bankruptcy
According to The Street, The retail sector experienced a substantial decline in brick-and-mortar locations in 2024, as many retail chains closed underperforming stores or opted against above-market leases in bankruptcy proceedings. This trend led to the shuttering of hundreds of retail spaces nationwide.
Rite Aid’s Major Store Closures
One of the most significant events contributing to the retail landscape’s changes was Rite Aid’s Chapter 11 bankruptcy, filed on October 15, 2023. This bankruptcy would ultimately result in the closure of more than 800 stores by the time the company exited bankruptcy on September 3, 2024, marking the largest number of closures in the past year.
Rue 21 and Express Exit the Market
The retail sector also saw the demise of popular mall teen clothing retailer Rue 21, which filed for Chapter 11 bankruptcy in May and subsequently closed all 540 of its locations across the nation. Additionally, Express, another well-known mall retailer operating 540 stores, filed for Chapter 11 bankruptcy on April 22, seeking to reorganize while planning to close 95 of its stores and its 10 UpWest locations.
99 Cents Only Files for Liquidation
In a further blow to the retail landscape, discount retail chain 99 Cents Only filed for Chapter 7 bankruptcy liquidation in May 2024, resulting in the closure of over 370 stores in Arizona, California, Nevada, and Texas.
Big Lots Continues Store Closures
Big Lots, the bankrupt discount home goods retailer, has also been actively closing stores. On October 4, the company filed a list of additional closures, designating 46 more locations to shut down. This brings its total number of store closures to nearly 500.
Big Lots initially filed for Chapter 11 protection on September 9 in the U.S. Bankruptcy Court for the District of Delaware, seeking to sell its assets to its stalking-horse bidder, Nexus Capital Management, for a bid of $760 million. This bid includes $2.5 million in cash, debt payoff, and assumption of liabilities.
Bankruptcy Proceedings and Financial Struggles
The court has scheduled an auction for October 18 if multiple bids are submitted, with a hearing set to approve the sale on November 4. The retailer, founded in 1967, had previously filed notices on September 11, listing 344 locations for closure and liquidation. Additional lists followed on September 20, indicating 49 more closures, and on September 27, which included 58 additional stores. The notice filed on October 4 added another 46 closures, culminating in a total of 497 out of 1,392 locations that Big Lots operated in 48 states earlier this year.
The Columbus, Ohio-based company cited high competition, disruptions from Covid-19, a challenging interest rate environment, and a less dependable supply chain as contributing factors to its bankruptcy filing. CEO Bruce Thorn noted that the company struggled in recent quarters as a downturn in the economy affected customer spending and profits, with a reported 10.2% decline in sales to $1.01 billion during the first quarter and a loss of $132.3 million.
