Moody’s warns of tough 2026 retail outlook, Big Lots workers face pressure
Moody’s sees weaker retail profits ahead, and Big Lots workers are still operating in the shadow of bankruptcy, closures and a partial rescue.
Moody’s latest retail outlook lands as a blunt warning for Big Lots workers: the market is still tilted toward chains that can take a hit and keep moving. The firm expects the global retail and apparel sector’s adjusted EBIT to be flat or fall by 2% in 2026, after a 1.6% decline last year, with high prices, cautious consumers and a sluggish U.S. labor market still squeezing sales and margins.
That backdrop matters because the winners in this kind of market are usually the operators with scale. Large value retailers such as Walmart, Costco and Target, along with dollar stores and off-price apparel chains, have been better positioned to capture shoppers who want low prices and less hassle. For stores that do not have that cushion, the message is harsher: keep assortments tight, keep shelves full and keep checkout moving, or lose the sale.
Big Lots has already lived through the downside of that equation. The company filed for Chapter 11 bankruptcy on September 9, 2024, in the U.S. Bankruptcy Court for the District of Delaware, saying it operated more than 1,300 stores across 48 states and employed about 27,700 people. The filing followed high interest rates and a sluggish housing market that cut into demand for low-priced furniture and decor, two categories that were central to the chain’s business.
The bankruptcy quickly became a job-preservation story. After a planned sale to Nexus Capital Management fell apart, Big Lots began going-out-of-business sales at roughly 900 remaining stores in December 2024. On December 31, Judge J. Kate Stickles approved the sale of substantially all Big Lots assets to Gordon Brothers Retail Partners, and the transaction closed on January 3, 2025. Gordon Brothers said the deal preserved the brand, kept hundreds of stores open and prevented thousands of layoffs; trade estimates put the number of jobs saved at between 5,000 and 10,000.
The company’s next phase underscored how much the business had changed. Variety Wholesalers acquired 219 Big Lots stores and started reopening locations in waves, beginning with nine stores across six states on April 10, 2025. Later plans called for 132 stores across 14 states to reopen in May 2025, and the new operator said it would sell new categories of merchandise, not simply recreate the old model.
For workers, Moody’s outlook is another reminder that Big Lots is still operating in a brutal lane of retail. The chains with the most room to absorb pressure are still taking share, while stores like Big Lots have to earn every sale through discipline, speed and a sharper value message.
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