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Bed Bath & Beyond offers grim outlook; warns of bankruptcy

Bed Bath & Beyond is exploring options, including filing for bankruptcy.

Bed Bath & Beyond is moving closer to bankruptcy.

In two financial filings, including one with the SEC, the beleaguered home goods retailer warned it is running out of cash and is considering bankruptcy, and noted there is “substantial doubt about the company’s ability to continue as a going concern.”

Bed Bath & Beyond cited worse-than-expected sales and said it probably won’t have the cash to cover expenses, such as lease agreements or payments to suppliers, in the upcoming months.

“The company continues to consider all strategic alternatives including restructuring or refinancing its debt, seeking additional debt or equity capital, reducing or delaying the company's business activities and strategic initiatives, or selling assets, other strategic transactions and/or other measures, including obtaining relief under the U.S. Bankruptcy Code,” stated Bed Bath & Beyond.

In its SEC filing, the company said it wasn’t able to refinance a portion of its debt. Bed Bath & Beyond has nearly $1.2 billion in unsecured notes, with maturity dates spread across 2024, 2034 and 2044.

Bed Bath & Beyond said it expects a net loss of about $385.8 million (including impairment charges of approximately $100.0 million) for its third quarter (ended Nov. 26), compared to a loss of $276.4 million in the year-ago period.  Net sales are forecast at approximately $1.259 billion compared to $1.878 billion in the year-ago period, with the decline reflecting lower customer traffic and reduced levels of inventory availability, among other factors, the company said. 

In a company release, Bed Bath & Beyond president and CEO Sue Gove sounded an optimistic note and reiterated her vision for the future. In August, Gove detailed the company’s newest turnaround strategy, which involves store closings, job reductions and a pullback from the private label strategy it had focused on in recent years.

“Our plan has two anchors: the first enables us to refocus merchandising and inventory, operate more efficiently, and grow our digital and omni-capabilities, and the second focuses on strengthening our financial position,” she stated. “Transforming an organization of our size and scale requires time, and we anticipate that each coming quarter will build on our progress."

Grove said that the company’s third-quarter financial performance was negatively impacted by inventory constraints, and that reduced credit limits resulted in lower levels of in-stock presentation within the assortments that customers expect. 

“Consequently, we have already leveraged the liquidity gained from the holiday season to immediately pursue higher in-stock levels with support from our key vendors,” she said. “We have seen trends improve when in-stock levels have increased."

On Thursday, Neil Saunders, managing director of GlobalData Retail, tweeted that Bed Bath & Beyond is too far gone to be saved in its present form and its future options are few and far between.”

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