Bed Bath & Beyond warns it may file for bankruptcy

Struggling Bed Bath & Beyond warned on Thursday that there’s substantial doubt about the company’s ability to continue as a “going concern” even as the home goods retailer continues to study options like refinancing its debt or restructuring its business in bankruptcy court.

The outlook came after the company’s dismal sales continued through the holiday shopping season. Bed Bath & Beyond fell as much as 26% in premarket trading before paring the decline. The stock had already lost more than 83% of its value since the end of 2021.

The company, based in Union, New Jersey said that it expects to report net sales of $1.26 billion for the third quarter ended Nov. 26. That would be a 32% drop from a year earlier. It also anticipates a net loss of roughly $385.8 million for the third quarter, compared to a loss of $276.4 million in the year-earlier period.

The chain said that its financial performance over the holiday season was hurt by inventory constraints and reduced credit limits that resulted in shortages of merchandise on the shelves.

In August, Bed Bath & Beyond announced it would shutter stores and lay off workers in a bid to turn around its beleaguered business. It closed about 150 of its namesakes stores and slashed its workforce by 20%. It estimated those cuts would save $250 million in the company’s current fiscal year. It also said it had lined up more than $500 million of new financing. It started permanently closing stores during the pandemic.

Bed Bath & Beyond still has a large real estate footprint. Texas is its second largest state by store count with 76 stores, behind California which has 87. Bed Bath & Beyond started 2022 with 953 stores in the US and Canada with most stores between 18,000 and 50,000 square feet.

Mired in a prolonged sales slump, the company also announced back in August that it will revert to its original strategy of focusing on national brands, such as Oxo, Ninja and SodaStream, instead of pushing its own store labels.

That reversed a strategy embraced by its former CEO Mark Tritton, who was ousted last June after less than three years at the helm. It said it would get rid of one-third of its store brands, which had started to be rolled out in the last year or so.

Some suppliers had begun to halt shipments to the retailer in recent months, concerned about the company’s outlook.

That aggravated the already tenuous financial situation facing the company. The retailer — for decades 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 Inc. and other online retail juggernauts.

“Despite more productive merchandise plans and improved execution, our financial performance was negatively impacted by inventory constraints,” said Bed Bath & Beyond CEO Sue Gove. But, she added, “we have already leveraged the liquidity gained from the holiday season to immediately pursue higher in-stock levels with support from our key vendors. We have seen trends improve when in-stock levels have increased.”

Anne D’Innocenzio of The Associated Press, Jeannette Neumann of Bloomberg and Dallas Morning News staff writer Maria Halkias contributed to this report.

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