bed bath beyond warned on Thursday that he is running out of money and considering bankruptcy.
The retailer issued a “going concern” warning that it likely won’t have the cash to cover expenses like leases or payments to suppliers in the coming months, citing worse-than-expected sales. Bed Bath said it was evaluating financial options such as restructuring, seeking additional capital or selling assets, in addition to a possible bankruptcy.
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The company’s shares fell about 30% to close the day at $1.69 after Bed Bath provided the updates in two financial papers. The stock hit a 52-week low earlier in the day. Its market value has fallen to around $149 million at the close on Thursday.
A Bed Bath & Beyond store is seen in Miami, Florida on June 29, 2022.
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Still, CEO Sue Gove said the retailer is focused on rebuilding the business and making sure its Bed Bath & Beyond, Buybuy Baby and Harmon brands “remain preferred destinations for customers going forward.”
Bed Bath’s challenges include struggling to get enough merchandise to fill its shelves and drawing fewer customers to its stores and website.
The retailer also said it was unable to refinance part of its debt less than a month after informing investors it planned to borrow more to pay off parts of existing obligations.
Bed Bath’s debt burden is weighing on the company. The retailer has nearly $1.2 billion in unsecured debt securities with maturities spread out in 2024, 2034 and 2044. In recent quarters, Bed Bath has warned that it’s quickly using up cash.
Bed Bath’s notes all traded below average, a sign of financial distress.
standstill in the turning point
Bed Bath has endured a particularly tumultuous period, with the departure of its CEO and other top executives, company-wide layoffs, store closures and an overhaul of its merchandise strategy. As sales fell, its CEO, Mark Tritton, was ousted in June. Gove, who stepped in as interim CEO, has made the role permanent.
She presented a comeback strategy at the end of August. As part of the plan, she said the company will cut costs by downsizing its store space and workforce. Gove said it will add more items from popular national brands as it moves away from an aggressive private label strategy. And she said it has secured more than $500 million in new funding to help stabilize the business.
The company said in its latest earnings report it believes it has enough liquidity to move forward.
In a press release Thursday, Gove said recent sales results show why this turnaround plan is so important.
“Transforming an organization of our size and magnitude takes time, and we expect each quarter to come will build on our progress,” she said.
The company is also looking for a chief financial officer after chief executive Gustavo Arnal died by suicide in September.
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assembly losses
So far, the sales trend of Bed Bath has not changed. Net sales for the fiscal third quarter ended Nov. 26 are expected to be about $1.26 billion — a sharp decrease from $1.88 billion in the prior-year period, the company said.
A net loss of about $385.8 million is expected for the third quarter, representing a nearly 40% year-over-year increase in losses. Quarterly losses include an impairment charge of approximately $100 million that was unspecified.
The company is expected to report full quarterly earnings on Tuesday and host a earnings conference call.
Signs of Bed Bath’s financial distress can also be seen on store shelves. As the retailer’s cash register dwindles, some suppliers are unwilling to ship large quantities of goods—or in some cases no goods at all—to the company.
Gove said in a press release that reduced credit limits mean customers are seeing emptier shelves and less variety than they expect. She said the company is using the money it made over the holiday season to pay sellers and order more inventory.
“We’ve seen trends improve when inventories have increased,” she said.
Bed Bath already has a long history of strained relationships with key national brands such as Dyson, Keurig and Cuisinart. In previous holiday seasons, Bed Bath didn’t have popular gift items like KitchenAid’s stand mixers. Meanwhile, these items were plentiful at competitors such as Goal.
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