Bed Bath & Beyond warns it may go out of business

Bloomberg

Bed Bath & Beyond has begun preparations for a bankruptcy filing that would likely come during its first operating quarter of the year, according to people with knowledge of the moves who asked not to be named discussing confidential plans.
The Union, New Jersey-based company called off a proposed debt exchange and said that it might not be able to continue as a going concern. The company’s shares slumped as much as 14% in US premarket trading.
Bed Bath & Beyond added in a filing that it’s taking steps to improve its cash position, but that recurring losses and negative cash flow in the nine months ended leave “substantial doubt” that it can stay in business.
The company said it’s pursuing options including restructuring debt, selling assets or filing for bankruptcy, but added “these measures may not be successful.”
A representative for Bed Bath & Beyond said in a statement that “no determinations have been made as of this time” regarding the company’s bid to regain market share and enhance liquidity. The debt exchange offer would have given creditors the chance to swap unsecured bonds for a lower face value amount of new secured obligations.
Moving forward with the plan, which aimed to trim the company’s overall debt load, could have complicated a potential bankruptcy.
Some suppliers had begun to halt shipments to the retailer in recent months, citing concerns about the company’s outlook. That aggravated its already tenuous financial situation, accelerating a downward spiral that has been nearly a decade in the making. Bed Bath & Beyond, which for decades has been a mainstay of malls and shopping centers around the US, was plagued by years of management missteps and a dysfunctional corporate culture that left it ill-equipped to compete against Amazon.com and other online retail juggernauts.
Following the announcements, Bed Bath & Beyond’s bonds fell to new lows. Its 2024 notes traded down to around 12 cents on the dollar, from around 22 cents. The company’s shares fell 30% to $1.69.
Bed Bath & Beyond warned that it expects to report third-quarter revenue of $1.259 billion — below the $1.404 billion analysts had estimated and a steep decline from the $1.878 billion the company reported a year ago. Losses are also mounting, with Bed Bath & Beyond expecting a net loss of about $386 million for the three months that ended on November 26, 2022 — about 40% larger than the loss reported a year earlier.
The drop in third-quarter sales and the widening losses indicate that the holiday shopping season was worse for Bed Bath & Beyond than executives at the company had anticipated.