A Bed Bath & Beyond store appears on June 29, 2022 in Miami, Florida.
Joe Raedle | Getty Images News | Getty Images
Bed Bath & Beyond He warned Thursday that he was running out of cash and was considering bankruptcy.
Citing worse-than-expected retail sales, it warned that it will not have the cash in the coming months to cover expenses such as leases or payments to suppliers. In addition to potential bankruptcy, Bed Bath said it is exploring financial options such as restructuring, seeking additional capital or selling assets.
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Shares of the company fell 23% in early trading after Bed Bath published the updates in a pair of financial documents.
Still, CEO Sue Gove said the retailer was focused on rebuilding the business and ensuring that its Bed Bath & Beyond, Buybuy Baby and Harmon brands “remain the destinations of choice for customers in the future.”
Among its challenges, Bed Bath said it struggled to get enough merchandise to fill its shelves and attracted fewer customers to its stores and website.
The seller also said less than a month later, he failed to refinance part of his debt to inform investors that it plans to borrow more to pay off parts of existing liabilities.
Bed Bath’s debt burden weighed heavily on the company. The retailer has approximately $1.2 billion of unsecured notes with maturities spread over 2024, 2034 and 2044. In recent quarters, Bed Bath has warned that it is quickly turning into cash.
Bed Bath’s notes all traded below par, a sign of financial distress.
Stalled turn
Bed Bath has had a particularly turbulent period with the departure of its CEO and other top executives, company-wide layoffs, store closings and an overhaul of its merchandising strategy. As sales declined, its CEO Mark Tritton He was fired in June. Gove, who started as interim CEO, took over the role permanently.
He In late August, he revealed his comeback strategy. As part of the plan, the company said it would cut costs by reducing its store footprint and workforce. It said it will add more products from popular national brands as it moves away from an aggressive private-label strategy. And it said it has secured more than $500 million in new financing to help stabilize the business.
The company said in its latest earnings report that it believes it has sufficient liquidity to move forward.
In a news release Thursday, Gove said recent sales results demonstrate why this turnaround plan is so important.
“Turning around an organization of our size and scale takes time, and we look forward to each coming quarter based on our progress,” he said.
The company is also looking for a chief financial officer after the CEO Gustavo Arnal died by suicide in September.
If you are having suicidal thoughts, contact them Suicide and Crisis Lifeline 988 for support and assistance from a trained advisor.
Mounting plates
So far, Bed Bath has seen no change in sales trends. Net sales in the fiscal third quarter ended November. 26, is expected to be about $1.26 billion, a sharp decline from $1.88 billion in the year-ago period, the company said.
It expects a net loss of about $385.8 million for the third quarter, a nearly 40% increase in year-over-year losses. The quarterly losses included an impairment charge of approximately $100 million, which was unquantified.
The company will report full quarterly results and hold an earnings call on Tuesday.
Signs of Bed Bath’s financial stress also showed up 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 product at all — to the company.
Gove said in a news release that credit limit cuts mean customers will see emptier shelves and less variety than they expected. He said the company uses the money it makes during the holiday season to pay vendors and order more inventory.
“We’ve seen trends improve when stock levels increase,” he said.
Bed bath already has a history of strained relationships with major 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, there were many competitors like these items target.
