Report: Bed Bath & Beyond shores up liquidity with loan deal
Bed Bath & Beyond has reportedly bought itself some breathing room.
The struggling home goods chain has secured a loan to help boost its cash as it tries to navigate a number of challenges, reported the Wall Street Journal. According to the Journal, JPMorgan Chase carried out a marketing process for Bed Bath & Beyond as the retailer sought a loan of approximately $375 million.
The deal would “provide liquidity and give vendors confidence they can continue to ship goods to Bed Bath & Beyond,” the report said.
Joseph Acosta, partner in the bankruptcy practice at international law firm Dorsey & Whitney, said that some vendors have already cut the company off from shipments and there is a concern that vendors have started demanding payment upfront before shipping goods to the retailer.
“If BBBY does not secure some more liquidity soon to allay vendor concerns, it might not receive enough inventory to fill its traditional holiday demand, which could quickly put the company in a spiral,” Acosta said in previous remarks on Chain Store Age.
The news of the deal comes days after S&P Global Ratings downgraded the chain’s credit rating further, from CCC from B-minus, citing the company’s growing challenges, including poor sales, shrinking liquidity and looming debt maturities.
"We believe macro conditions are worsening and prospects for home goods sales continue to deteriorate," the agency stated. "Other retailers have indicated a significant, rapid decline in discretionary purchases across retail, and we believe BBBY will remain susceptible to further declines.”
In June, Bed Bath & Beyond ousted its CEO, Mark Tritton, after a disastrous first quarter that included a 25% drop in sales. It appointed Sue Gove, an independent director on the company's board and chair of the board's strategy committee, as interim CEO.
“We must deliver improved results. Our shareholders, associates, customers, and partners all expect more," Gove said in a statement.
In August, the retailer hired Kirkland & Ellis to help address its debt load, reported Bloomberg.