Bankruptcy Troubles: Retailer Closes More Locations in Chapter 11 Restructuring

According to The Street, In 2024, major retail chains are closing a significant number of store locations, with many taking drastic measures to navigate economic challenges. Some retailers are executing out-of-court restructuring plans, while others are entering Chapter 11 or Chapter 7 bankruptcy filings.

Walgreens Boots Alliance Takes Action

One notable case is Walgreens Boots Alliance (WBA), which operates 8,000 stores with 6,000 profitable locations. On October 15, 2024, the company announced in its fourth-quarter report that it plans to close 1,200 underperforming Walgreens stores over the next three years, with 500 closures set for fiscal year 2025. This decision is part of its out-of-court restructuring strategy.

Initially, Walgreens evaluated 2,000 stores for potential closure but ultimately identified 1,200 locations for closure. The company aims to improve the operating performance and cash flow of the remaining 800 stores and will continue to assess all locations to optimize its retail footprint.

Orvis to Downsize Operations

Orvis, an outdoor gear and apparel retailer based in Manchester, Vermont, announced on October 4 that it would close an undisclosed number of its 80+ retail stores across the U.S. The company will also lay off 112 employees and discontinue its historic retail catalog to create a “smaller and more agile business.” As of now, Orvis has not indicated any plans to file for bankruptcy.

Choice Market’s Permanent Closure

In another significant development, Choice Market, a Denver-based upscale grocery chain, has ceased operations entirely after failing to restructure its business. The company converted its Chapter 11 bankruptcy to Chapter 7 liquidation, as stated in a LinkedIn announcement on October 7.

Big Lots Faces Major Reductions

Bankrupt discount home goods retailer Big Lots has been actively reducing its store footprint following its Chapter 11 filing. As of October 11, the company designated an additional 56 locations for closure, bringing the total number of closures to over 550 units.

Big Lots filed for Chapter 11 protection on September 9, seeking to sell its assets to Nexus Capital Management for a $760 million bid, which includes $2.5 million in cash, debt payoff, and assumption of liabilities. The company proposed a new bid deadline for assets on October 23, with an auction scheduled for October 28 if multiple bids are received. A hearing to approve the sale is proposed for November 8.

Also read: TGI Fridays in Trouble: 12 Locations Close as Part of 36 Store Shutdowns This Year

The initial closure notice on September 11 listed 344 store locations nationwide for liquidation. Subsequent filings added more closures, including 49 stores on September 20, 58 on September 27, and 46 on October 4. The latest list of 56 closures brings the total to 553 of the 1,392 locations Big Lots operated across 48 states earlier this year.

Challenges Leading to Bankruptcy

Big Lots, founded in 1967, cited high competition, disruptions from COVID-19, a challenging interest rate environment, and a less reliable supply chain as contributing factors to its bankruptcy filing. According to court documents, these factors have increased operating costs significantly.

In recent quarters, Big Lots has struggled as economic downturns have affected consumer spending and profits. CEO Bruce Thorn reported a 10.2% drop in sales to $1.01 billion during the first quarter, resulting in a loss of $132.3 million.

Despite being the nation’s fourth-largest home goods retailer with general operating revenues of $4.7 billion in 2023, Big Lots is now facing critical challenges as it navigates this tumultuous retail landscape.