Bed Bath & Beyond has been struggling to maintain its operations since the beginning of 2023 with BBBY stock correcting over 88% year-to-date.
One of America’s top home goods retailers Bed Bath & Beyond filed for Chapter 11 bankruptcy protection on Sunday, April 23. The development comes as the company failed to raise funds in several last-ditch efforts to raise fresh capital.
Bed Bath & Beyond’s business came under stress in January this year flashing early signs of potential bankruptcy. The company had already issued a “going concern notice” stating that it may not have enough cash to cover expenses after a dismal holiday season.
The stock price of Bed Bath & Beyond Inc (NASDAQ: BBBY) has already been corrected by more than 88% since the beginning of the year. On Friday, the BBBY stock was trading at 29 cents with a market cap of $136.9 million. For reference, the stock was trading at $20 last April 2022.
As the company starts working on closing the business and liquidating assets, its 360 stores and 120 Buybuy Baby locations will remain open for the time being. However, it has filed motions in the New Jersey bankruptcy court asking for permission to auction its two brands. The company has already shown commitment to closing all of its Harmon FaceValue stores.
As per the court filing, Bed Bath & Beyond had about $4.4 billion in assets and $5.2 billion in debts by the end of November 2022. The home goods retailer has anywhere between 25,001 and 50,000 total creditors. This was alongside a long list of creditors and vendors. Also, the company owes the most to BNY Mellon at $1.18 billion. In the company’s filing, CEO Sue Gove said:
“Millions of customers have trusted us through the most important milestones in their lives – from going to college to getting married, settling into a new home to having a baby. Our teams have worked with incredible purpose to support and strengthen our beloved banners, Bed Bath & Beyond and buybuy BABY”.
Bed Bath & Beyond: Supporting Operations through Bankruptcy
Sixth Street has said that it will lend Bed Bath & Beyond a total of $240 million in debtor-in-possession financing which will give the company the necessary cash flow to support operations through the entire bankruptcy process.
Furthermore, Bed Bath said that it would continue to pay employees wages and benefits, honor its obligations to vendors, and also maintain customer programs. As per the filing, the company has appointed longtime retail turnaround expert Holy Etlin as Bed Bath’s chief financial officer and chief restructuring officer.
As troubles started mounting for Bed Bath & Beyond earlier this year, it started to conduct stock offerings. However, the news wasn’t received well by investors as the stock price came spiraling down. As of April 10, the company sold more than 100 million shares but managed to raise only $48.5 million. As it couldn’t raise the anticipated proceeds, the company had no option but to take the route of bankruptcy.
Bed Bath & Beyond has been struggling to keep good relationships with its vendors and has been simultaneously grappling with low inventory levels, falling sales, as well as a dwindling cash pile.
In its securities filings, the company said that it faced difficulty in keeping the shelves stocked due to liquidity issues as some vendors started asking for pre-payments. During the March quarter, the company had seen a drop in sales by 40-50%.