Bed Bath & Beyond warns it doesn’t have the cash to pay down debts

Signage is seen through an overturned shopping cart outside a Bed Bath & Beyond Inc. store in Greendale, Wisconsin.

Daniel Acker | Bloomberg | Getty Images

Bed Bath & Beyond said Thursday it doesn’t have enough cash to pay down its debts and it has defaulted on its credit line with JP Morgan, warning once again of a potential bankruptcy.

Shares of Bed Bath plunged Thursday afternoon, prompting brief trading halts. The stock was last down about 20%, giving the company a market value of about $300 million.

In a securities filing, the struggling home goods retailer said it “does not have sufficient resources to repay the amounts under the Credit Facilities and this will lead the Company to consider all strategic alternatives, including restructuring its debt under the US Bankruptcy Code.”

Bed Bath is attempting to cut costs by lowering capital expenditures, closing stores and negotiating lease deals with its landlords but warned “these measures may not be successful.”

The latest filing is another sign that time is running out for Bed Bath, as sales lag and debts pile up for the cash-strapped retailer. It comes at a time that inflation is weighing on consumers’ wallets and shoppers put their discretionary dollars towards experiences, like dining out or booking trips, over home goods.

Amid tough macro challenges, Bed Bath’s vendors tightened their credit terms and cut limits while requiring earlier payments during its fiscal second quarter, which prevented the company from properly stocking its inventory ahead of the holiday season, the filing states. Some vendors required prepayments, the company said.

The company owes $550 million under its asset-backed loan with JP Morgan and $375 million to lender Sixth Street after expanding its credit facility last August.

Bed Bath’s debt load also includes nearly $1.2 billion in unsecured notes, which have maturity dates spread across 2024, 2034 and 2044, and have been trading at distressed levels. The company said previously it wasn’t able to refinance portions of that debt less than a month after it told investors it planned to take out more credit to pay down its obligations.

The company has been burning through cash in recent quarters. It used $890 million in cash during the nine months ended Nov. 26, the company reported Thursday. As of that date, Bed Bath said it had $225.7 million remaining in cash.

The update Thursday comes several weeks after the retailer issued a “going concern” notice that it may not be able to cover its expenses following a worse-than-expected quarter.

Bed Bath has been exploring its options in recent weeks. The retailer has been in discussions to nail down financing that would keep it afloat if it were to file for bankruptcy, CNBC previously reported.

The company also is in the midst of a sale process in hopes of keeping its namesake chain and Buybuy Baby business alive. In addition, the company has been preparing for a potential chapter 11 filing in the US Bankruptcy Court in New Jersey, CNBC previously reported.

Bed Bath & Beyond’s stock has fallen roughly 80% in the last 12 months.


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