Bed Bath & Beyond may need to file for bankruptcy
Bed Bath & Beyond says it’s running out of money and may need to file for bankruptcy protection.
The retailer has struggled to find its footing in recent years through a series of poorly timed or otherwise lackluster turnaround strategies, and as a result its stores have seen fewer shoppers and declining sales.
On Thursday, the retailer said that it has now concluded that there is substantial doubt about the company’s ability to continue as a going concern. This means that Bed Bath & Beyond has to consider all financial options, including restructuring, selling assets, or going through bankruptcy.
“Although these measures may not be successful,” the company added. As soon as markets opened, its stock price dropped more than 20%.
“For the quarter that ended right after Black Friday, Bed Bath expects to report sales declining by 33% compared to last year,” a reflection of “lower customer traffic and reduced levels of inventory availability.” Almost 40% losses are suggested to increase to $385.8 million by the forecast.
The company plans to offer further details on Jan. 10 at its financial report to investors.
Bed Bath & Beyond has been facing a crisis after crisis in recent years, including a rise and crash as a meme stock, a leadership shakeup, trouble with suppliers, a turnaround intended to improve upon a previous turnaround, store closures, job cuts, and the shocking news of its financial chief’s death.
As the company was in the middle of an overhaul that involved replacing big name brands with more private brands, most notably, Bed Bath & Beyond missed out on the shopping boom that the pandemic brought to many home-goods sellers. The new-brands turnaround strategy left top products like KitchenAid mixers missing from Bed Bath’s shelves, exacerbating the industry-wide supply chain crisis. Its website lagged behind its peers.
Ryan Cohen, activist investor and famous for Chewy and GameStop, bought a stake in the company last year. This prompted his followers on Reddit and YouTube to pump up Bed Bath’s stock. Then, just as suddenly as the CEO and other leaders were ousted, Cohen sold his entire stake.
A rudderless retailer is one without direction, and this is what has become of Bed Bath & Beyond. In September, the company announced closures of another 150 stores and job cuts for a fifth of its corporate and logistics staff. Suppliers began hesitating about sending more stuff to Bed Bath, after the company announced it would be closing 200 stores.
The company had secured financing late summer that propelled it through the holiday shopping season. The retailer is now trying to refinance its debts after waning enthusiasm from creditors.