So I’m sure we all know Big Lots is filing for Chapter 11 bankruptcy, right? But while some might be thinking “Why is that still news?” bear with me - because those of you who are fans of extreme value or just love a good bargain, this might be the moment you’ve been waiting for. 

(Source: Giphy) 

In short, the Columbus-based retail giant known for its furniture, home decor, and “how are these prices even legal?” deals are circling the bankruptcy drain, but, but, but… it appears that Big Lots’ “stalking horse” bidder has come through after all.

“Thank Gawd…” - Big Lots, probably

(Source: Giphy) 

The stalking horse? None other than your friendly neighborhood cutthroat (and former) frat bros at Nexus Capital Management - who have officially stepped in as Big Lots’ saving grace. Translation: they’re the first bidder out the gate and have set the bar at $760 million. That’s about the price of a small country—or, y'know, a financially struggling retail chain that’s been on a -98.64% stock price freefall this year.

(Source: Modern Retail) 

Of course, this is massive news for Big Lots, but let’s all keep in mind that they aren't the only ones feeling the heat in the discount retail space. In fact, 21 major retailers and restaurant chains have already bitten the bankruptcy bullet in the first half of 2023 alone. Remember Bed Bath & Beyond? 

Yeah, they’re probably regretting that “beyond” part right now as inflation and rising interest rates are absolutely wrecking consumers. Which I’m sure you already know as eggs have skyrocketed to prices that equal selling a kidney. 

(Source: ABC Columbia) 

However, Big Lots’ woes go deeper than most. We’re talking about nine straight quarters of declining same-store sales while the competition—think Dollar Tree, Walmart, Target, and even the online giants (Amazon and Wayfair)—have been eating Big Lots’ lunch, dinner, and midnight snack.

(Source: Fox Business) 

So to stop the bleeding, Big Lots is planning to shut down 550 out of its 1,400 stores. That’s a serious chunk of its national footprint. The good news though? Clearance sales are already underway, with discounts ranging from 30% to 50%. If you’re a bargain hunter, (like my wife), well congrats you just made it to the Super Bowl… depending on your location, of course.

(Source: Giphy) 

But what about the other 900 stores though? Well, that’s where Nexus Capital Management comes in (aka the same company who already owns brands like Toms shoes and Dollar Shave Club). For them, Big Lots is just another fixer-upper in their portfolio. They see potential—shocking much? But hey, private equity firms don’t just throw $760 million around unless they see a *serious* opportunity to turn things around. 

The idea? Restore Big Lots as the king of extreme value retail. Because, let’s face it—people still love a good deal. That’s not going away anytime soon. And considering the Fed may do all of us a favor next week with a 25 point cut… retailers who can nail the balance of cheap and quality might just have a chance. 

(Source: CNBC) 

But still, even with a $760 million lifeline to work with, Big Lots still has their work cut out for them. Sure, if Nexus Capital remains the highest bidder (which it’s looking like it is), Bank Lots will be able to keep the lights on during the bankruptcy process, but creditors and suppliers—like Ashley Furniture, Serta, and Sealy—are understandably sweating bullets. The supply chain implications of this bankruptcy are still up in the air, and no one’s exactly sure how it’s all going to shake out.

(Source: Giphy) 

Plus, let’s not forget that “cheap” still isn’t “cheap enough” in the economy right now. As Neil Saunders, managing director of GlobalData, points out, Big Lots has been getting outplayed by its competitors in the low-price game - as Walmart and Target are playing “how low can you go” with their prices to make up the sales dip from the economy.

And we all know, when you put something up against Target (especially women, no offense), Target is winning all day erryday. 

(Source: Reddit) 

Now of course, you can take what you want from all of this information. But in the end, with the auction process set to unfold in the coming weeks, all eyes will be on Nexus Capital and any dark-horse bidders that might emerge. 

Meaning, it's clear that the fate of Big Lots—and maybe even the broader discount retail sector—definitely hangs in the balance. However, if there’s one thing we’ve learned from this whole dilemma is this: It’s Adapt or Die, baby. And if a company that you have in your portfolio isn’t adapting… well then, your portfolio might be left in the dust with it. 

(Source: Giphy) 

Speaking of getting left in the dust though…

While most of the market was focusing on Big Lots and Nexus Capital, or whether Nvidia was going to continue its massive 8% jump from yesterday…

Stocks.News premium members absolutely CRUSHED it today, with a massive +63.21% winner in… get this… LESS than two hours!

The best part?

It still has room to run!

Meaning, don’t miss out on the second half of this explosive move and click to upgrade to premium ASAP!

In the meantime, stay safe and stay frosty friends! Until next time… 

Stocks.News holds positions in Walmart  and Amazon as mentioned in the article.