Jan 5 (Portal) – Bed Bath & Beyond Inc (BBBY.O) said on Thursday it was reviewing options, including filing for bankruptcy, to address the US homewares retailer’s slump in sales, dwindling liquidity and debt burdens and its to drop stocks.
The retailer said in a regulatory filing that there were significant doubts about its ability to continue as a going concern, adding that it was exploring strategic alternatives, including restructuring or refinancing debt or seeking bankruptcy protection.
Bed Bath & Beyond said it expects a $385.5 million loss in the third quarter after sales plummeted 33%. Shares of the company plunged 23% to $1.84 in early trade on Thursday after the news. The stock was one of the most active on the Nasdaq, with almost 9.4 million shares traded as of 09:37 ET.
Bed Bath & Beyond’s fortunes dwindled and its shares plummeted after it adopted a strategy centered on its own private label. The retailer’s management, meanwhile, has changed course and aims to launch national brands.
“The turnaround plan put in place last year is not working. … To put it bluntly, the business is moving in the wrong direction at a rapid pace, with bankruptcy the most likely target,” said Neil Saunders, an analyst at GlobalData.
The company became a meme stock over the past year as its shares soared more than 400%. Activist investor Ryan Cohen, the chairman of GameStop Corp (GME.N), took a stake in Bed Bath & Beyond, which he later sold, sending shares plummeting.
“Our financial performance has been negatively impacted by inventory constraints as we have worked with our suppliers to address both micro and macroeconomic challenges,” said Chief Executive Officer Sue Gove.
The company will report results for the third quarter ended November 26 on Tuesday.
Bed Bath & Beyond said in its previous financial report this fall that it had $850 million in cash but had burned $325 million in the second quarter.
Analysts have estimated it will issue $1.5 billion in cash over the next two years.
The company had also asked bondholders to swap their holdings for new debt to give it more leeway to reverse its business, but called off the deal on Thursday after it didn’t see much interest from investors, according to filings with the US Securities and Exchange had received commission.
Bed Bath & Beyond had previously considered selling its prized Buybuy baby stores, which sell merchandise for infants and young children, but held back in hopes of fetching a higher price later, Portal reported.
The chain’s value helped the retailer get a $375 million loan, the most it could borrow.
Reporting by Aishwarya Venugopal in Bengaluru; Edited by Shounak Dasgupta, Subhranshu Sahu and Mark Porter
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