BedBath&Beyond says it may face bankruptcy

WASHINGTON (Reuters) - U.S. home furnishings chain Bed Bath & Beyond warned it was struggling to remain a going concern, raising the prospect of one of the country’s largest retail bankruptcies since the start of the pandemic.

The company, which has nearly 1,000 stores, told investors that it is considering strategic alternatives, including debt restructuring, raising new debt or equity, selling assets and "obtaining relief under U.S. bankruptcy law." The group's shares closed down 30% on January 5. Its market value, which was $17 billion a decade ago, has now fallen below $200 million.

BedBath & Beyond's balance sheet has been stretched for some time, but its reduced credit has made it difficult to buy the stock it needs for the holiday season. "Reduced inventory" and reduced customer traffic were the reasons for a sharp year-over-year drop in sales in the quarter ended Nov. 26, from $1.88 billion to about $1.26 billion. The company said an impairment charge of about $100 million will also increase its net loss for the period to about $386 million from $276 million a year ago.

The group had more than $1.7 billion in long-term debt at the end of August and received a $375 million loan from Sixth Street Partners in August. It has also been seeking to reduce its debt through a bond exchange, which credit ratings agencies consider tantamount to a default because noteholders would receive less than originally promised. Bed Bath & Beyond's unsecured notes due next year fell to just under 12 cents on the dollar, nearly halved from 22 cents on Wednesday.

The company’s bonds due in 2034 also fell to around 6 cents on the dollar from 10 cents a day earlier. Most U.S. retailers are heading into the critical holiday season with healthy inventory levels, a sharp contrast to the first two years of the pandemic, when supply chain disruptions and sharp changes in consumer buying patterns complicated sales for retailers.

However, Bed Bath & Beyond has had more difficulty than most in stocking the merchandise customers want, and suppliers have grown increasingly concerned about its ability to pay. "Despite more effective merchandise planning and improved execution, our financial performance has been negatively impacted by inventory constraints as we work with suppliers to navigate micro- and macroeconomic challenges," Chief Executive Sue Gove said.

Bed Bath & Beyond said it was using the liquidity from holiday sales to restore inventory levels. But the group is struggling as inflation weighs on most U.S. retailers after a period when government stimulus programs boosted consumer spending.

It is learned that on January 5, Adobe Analytics reported that US consumers spent $212 billion online in November and December, an increase of 3.5% over the same period in 2021. This growth rate is lower than the overall inflation rate, but it is enough to set a new record for holiday e-commerce spending.

Editor ✎Estella/

Disclaimer: This article is copyrighted and may not be reproduced without permission.