Chapter 11 Bankruptcy: Troubled Retailer Closes Additional Stores
According to The Street, Retail chains are facing a challenging year in 2024, with numerous major retailers announcing significant store closures. Some of these closures are part of out-of-court restructuring plans, while others result from Chapter 11 or Chapter 7 bankruptcy filings.
Walgreens Plans to Close 1,200 Stores
On October 15, Walgreens Boots Alliance (WBA), which operates 8,000 stores—with 6,000 profitable locations—announced in its 2024 fourth-quarter report that it would close 1,200 underperforming Walgreens stores over the next three years. This decision includes 500 closures planned for fiscal year 2025 as part of an out-of-court restructuring plan.
In the third quarter, Walgreens began evaluating 2,000 stores for potential closure and ultimately identified 1,200 locations to close. The company aims to enhance the operating performance and cash flow of the remaining 800 stores while continuing to assess its overall retail footprint.
Orvis to Reduce Retail Presence
Outdoor gear and apparel retailer Orvis, based in Manchester, Vermont, announced on October 4 that it would close an undisclosed number of its over 80 retail stores in the U.S. The company plans to lay off 112 employees and discontinue its historic retail catalog to “enable a smaller and more agile business,” as reported by VTDigger. Orvis has not indicated any plans to file for bankruptcy.
Choice Market Ceases Operations
In another blow to the retail sector, Choice Market, an upscale grocery chain based in Denver, has permanently ceased operations after failing to restructure its business. The company converted its Chapter 11 bankruptcy to Chapter 7 liquidation, as stated in an October 7 announcement on LinkedIn.
Big Lots Continues to Downsize
Big Lots, a bankrupt discount home goods retailer, has been aggressively reducing its store footprint since filing for Chapter 11 protection. On October 11, the company designated 56 additional locations for closure, bringing its total closures to over 550 units.
Big Lots 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 stalking-horse bidder Nexus Capital Management for a $760 million bid. This bid 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 date set for October 28 if multiple bidders participate. A hearing to approve the sale is proposed for November 8.
Also read: TGI Fridays Cuts Deep: 12 More Locations Close in Latest Round of Closures
Founded in 1967, Big Lots filed its initial notice on September 11, listing 344 store locations nationwide for closure and liquidation. Subsequent notices added 49, 58, and 46 more closures, bringing the total to 553 of the 1,392 locations the retailer operated in 48 states earlier this year.
Reasons Behind the Closures
Big Lots cited several challenges, including high competition, disruptions caused by COVID-19, a high-interest rate environment, and an unreliable supply chain, which have all contributed to rising operating costs. According to CEO Bruce Thorn, the company experienced a 10.2% drop in sales to $1.01 billion during the first quarter, resulting in a loss of $132.3 million.
As the nation’s fourth-largest home goods retailer, Big Lots reported general operating revenues of $4.7 billion in 2023.
