By Geoffrey Smith
Investing.com — Bed Bath & Beyond (NASDAQ:) said it lost nearly $101 million in the fourth quarter as sales fell by one-third from a year earlier, reinforcing doubts about the company’s ability to stay afloat.
However, the struggling retailer’s stock soared over 13% in premarket trading as it avoided announcing a bankruptcy filing, having warned of that risk last week. A credit rating upgrade from Standard & Poor’s, which lifted it out of ‘selective default’ status, also helped sentiment toward the stock.
Bed Bath & Beyond said comparable sales fell 32% from a year earlier in the three months through December, the third quarter of its fiscal year, as it struggled to shift excess inventory.
CEO Sue Gove was unable to add much to the company’s warning last week that it may be forced to file for chapter 11 bankruptcy protection, saying only that it is considering “all strategic alternatives to accomplish our near- and long-term goals.”
“Multiple paths are being explored and we are determining our next steps thoroughly, and in a timely manner,” Gove said.
Bed Bath & Beyond was one of a handful of stocks that got a new lease of life from retail traders during the pandemic, whose aggressive short squeezes generated handsome but ultimately short-lived gains. Having struggled already for years before the pandemic, it was unable to generate the turnaround that retail investors hoped for and was caught out again as consumers emerged from lockdown to switch their spending away from home improvement items such as furnishings and back toward services and entertainment.
The company said its total available liquidity, including its credit facilities, was down to around $500M at the end of the last quarter, of which cash and cash equivalents totaled no more than $200M. While it said it is on course to cut running costs by $500M annually on present trends, helped by its ongoing closure program that will cut 150 stores, it gave no forecast as to when it expects its negative cash flow to turn around. It had negative cash flow of $308M in the quarter, taking total outflow to over $1.1B in the first three quarters of its fiscal year.