Bed Bath & Beyond in update on reverse stock split; comments on naked short selling
Bed Bath & Beyond issued a formal update to shareholders about its upcoming “special” meeting to vote on its proposed reverse stock split.
The embattled retailer said that while it has received several inquires from shareholders related to “naked short selling,” it has no specific access to information on share lending for short selling transactions. (Naked short selling is the illegal practice of selling shares of stocks that the seller does not own and may not even exist, with a promise to deliver them at a later date.)
“While the company is unable to confirm such activity, the company denounces any market manipulation of its stock,” the retailer said in a statement on Monday.
As previously reported, Bath & Beyond has proposed a reverse stock split in its latest effort to raise capital and avoid filing for bankruptcy and wants shareholders to approve the split at a special meeting on May 9. The company warned in an SEC filing that it would likely file for bankruptcy protection if the split is not approved.
"We are seeking shareholder approval for a reverse stock split to continue raising the necessary capital to fulfill our business goals,” CEO Sue Gove said in the statement on Monday. “We understand the choices we have had to make to improve our liquidity have led to speculation both about our business and our stock. We are taking the necessary steps as part of our financial strategy to sustain and grow our business.”
Last week, Bed Bath & Beyond announced it has entered into a vendor consignment program with ReStore Capital, a Hilco Global company. ReStore Capital will purchase up to $120 million — on a revolving basis at any given time — of pre-arranged merchandise from Bed Bath & Beyond’s key suppliers to boost inventory levels at the retailer’s namesake and Buybuy Baby stores.
In February, Bed Bath & Beyond gave a “strategic update” on its plan to save its
ailing business which included incremental store closures to shrink its total U.S. store to approximately 360 Bed Bath & Beyond stores and approximately 120 Buybuy Baby stores. (The company also announced it was shuttering its Harmon
chain.)
“We have operated for more than 50 years, and we are determined to deliver for the long-term benefit of our stakeholders,” Gove said in the company’s most recent statement.