American furniture retail giant on the brink of bankruptcy

According to documents submitted by the US Securities and Exchange Commission last month, Big Lots, a discount furniture retailer based in Ohio, expects to close "35 to 40" stores by the end of this year. The document points out that due to inflation leading to reduced consumer spending, "people have significant doubts about the company's ability to continue operating. According to the June financial report press release, Big Lots operates over 1300 stores in 48 states across the United States. Last month, Big Lots reported a net loss of $205 million for the first quarter of the 2024 fiscal year ending May 4th, with net sales decreasing by 10.2% compared to the same period last year.

Firstly, the number of bankruptcies by American companies has reached a historic high, making it difficult for heavily indebted companies to adapt to the new era of high interest rates. According to the latest data released by S&P Global Intelligence, 75 companies applied for bankruptcy in June, the highest number of bankruptcies in a single month since the worst period of the COVID-19 epidemic in early 2020. This brings the total number of bankruptcies so far this year to 346, significantly higher than the same period in the past 13 years.

Secondly, in terms of operations, Bruce Thorne, President and CEO of Big Lots, stated in a press release: "Although we made substantial progress in improving our business operations in the first quarter, we were unable to achieve our sales targets mainly due to the continued reduction in consumer spending by our core customers, particularly in high priced non essential items." Like many other retailers, this retailer is also facing a decline in sales due to price increases and consumer spending declines. According to financial disclosures, sales for the first quarter of 2023 to 2024 decreased by 10.2%, equivalent to a loss of approximately $114.5 million.

In addition, the company also incurred an additional $72.2 million, increasing total expenses from $501.6 million in the first quarter of 2023 to $573.8 million in the first quarter of this year. The company also stated that there are "significant doubts" about its ability to continue operating, which has sparked speculation that the company may file for bankruptcy. According to The New York Post, this retailer has been losing money since 2022 and relying on dwindling cash, sparking concerns of bankruptcy. The document did not disclose which stores will be closed. Big Lots has not immediately responded to requests for comment or closed information.

If Big Lots ultimately files for bankruptcy, it will be one of the few well-known food and retail chains to file for bankruptcy since the outbreak of the pandemic, along with several other companies including Red Lobster, Rite Aid, Bed Bath&Beyond, and Christmas Tree Shop. Other retailers have also announced multiple rounds of store closures to reduce underperforming stores. Since 2020, Hooters, Walgreens, Sears, Kmart, JC Penny, and even Disney stores have closed their stores nationwide.

However, American media points out that bankruptcy does not necessarily mean bankruptcy, and many American companies apply for bankruptcy to get rid of their debts. For example, while orderly shrinking its business, 3b Company is seeking to sell some or all of its assets. If a buyer can be found to take over, it is possible to avoid closing the store.

Overall, in recent years, due to the unstable economic situation and the trend of e-commerce, many large chain retailers in the United States that mainly operate physical stores have been poorly managed and forced to close their stores on a large scale or even go bankrupt, including established companies such as Macy's. The current macroeconomic environment in the United States is under significant pressure, with increasing operational costs such as logistics and manpower. However, the purchasing power of low-income groups in the United States has severely declined, and almost all low-priced retail industries will face collapse pressure.