Bed Bath & Beyond warns of potential bankruptcy

A Bed Bath & Beyond store is seen on June 29, 2022 in Miami, Florida.

Joe Raedle | Getty Images News | Getty Images

Bed bath and beyond warned on Thursday that he was running out of money and was considering going bankrupt.

The retailer, citing worse-than-expected sales, issued a ‘continuity’ warning saying that over the next few months it is unlikely to have the cash to cover expenses, such as leases or payments to suppliers. The company said it was exploring financial options, such as restructuring, seeking additional capital or selling assets, in addition to possible bankruptcy.

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The company’s shares fell 23% in early trading after Bed Bath released the updates in a pair of financial documents.

Still, CEO Sue Gove said the retailer is focused on rebuilding the business and making sure its brands, Bed Bath & Beyond, Buybuy Baby and Harmon, “remain top destinations for customers in the coming”.

Among its challenges, Bed Bath said it was struggling to get enough merchandise to fill its shelves and was attracting fewer customers to its stores and website.

The retailer also said it was unable to refinance some of its debt, less than a month after telling investors it planned to borrow more to pay off some of the existing bonds.

Bed Bath’s indebtedness weighs on the company. The retailer has nearly $1.2 billion in unsecured notes, with maturity dates spread across 2024, 2034 and 2044. In recent quarters, Bed Bath has warned it is burning through cash fast .

Bed Bath notes are all trading below par, a sign of financial distress.

Turnaround in neutral

Bed Bath has gone through a particularly tumultuous time, with the departure of its CEO and other senior executives, company-wide layoffs, store closures and an overhaul of its merchandise strategy. As sales dwindled, its CEO Mark Tritton was forced out in June. Gove, who stepped in as interim CEO, assumed the role permanently.

She presented a comeback strategy at the end of August. As part of the plan, she said the company would reduce costs by reducing its store footprint and its workforce. She said it would add more items from popular national brands, as it moved away from an aggressive private label strategy. And she said she secured more than $500 million in new funding to help stabilize the business.

The company said in its last earnings report that it believes it has enough cash to move forward.

In a Thursday press release, Gove said recent sales results illustrate why this turnaround plan is so important.

“Transforming an organization of our size and scale 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 the death by suicide of leader Gustavo Arnal in September.

If you are having suicidal thoughts, contact the Suicide and crisis lifeline to 988 for support and assistance from a qualified advisor.

Assembly losses

So far, Bed Bath has not seen its sales trends change. Net sales for the fiscal third quarter, which ended Nov. 26, are expected to be about $1.26 billion, down sharply from $1.88 billion a year ago, the company said. society.

It forecast a net loss of about $385.8 million for the third quarter, a nearly 40% increase in year-over-year losses. The quarterly losses include an impairment charge of approximately $100 million, which was not specified.

The company will release its full quarterly results and hold an earnings call on Tuesday.

Signs of Bed Bath’s financial stress also appeared on store shelves. As the retailer’s cash reserves dwindle, some suppliers are unwilling to ship large quantities of merchandise – or, in some cases, any merchandise – to the business.

Gove said in a press release that lower credit limits mean customers are seeing emptier shelves and less variety than they realize. She said the company uses money earned during the holiday season to pay suppliers and order more inventory.

“We saw trends improving as inventory levels increased,” she said.

Bed Bath already has a history of strained relationships with key national brands, such as Dyson, Keurig and Cuisinart. In previous holiday seasons, Bed Bath did not have popular gift items, such as stand mixers from KitchenAid. Meanwhile, these items were plentiful at competitors like Target.

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