Bankruptcy a Possibility for Bed Bath & Beyond
Things have gone from bad to worse at Bed Bath & Beyond, and after another quarter that saw the company’s sales plunge, the home specialty store appears to be on the verge of bankruptcy or possibly worse as officials said there is substantial doubt about the retailer’s ability to continue as a going concern.
In announcing preliminary results for its fiscal year third quarter ended Nov. 26, the company said it is considering all strategic alternatives, including bankruptcy.
In a press release issued Thursday, Jan. 5, Bed Bath & Beyond officials said other strategic alternatives include restructuring or refinancing its debt, seeking additional debt or equity capital, reducing or delaying the company's business activities and strategic initiatives or selling assets.
"We have a clear vision for the future of the company,” said Sue Gove, president & CEO of Bed Bath & Beyond. "Today's announcement underscores the importance of having initiated a turnaround at the start of the third quarter and why we strengthened our leadership team to execute each step with precision.”
Gove noted the company’s plans have two anchors. The first, she said, enables the struggling retailer to refocus merchandising and inventory, operate more efficiently, and grow its digital and omni-capabilities. The second focuses on strengthening its financial position.
“Transforming an organization of our size and scale requires time, and we anticipate that each coming quarter will build on our progress,” she added.
Bed Bath & Beyond’s on-going struggles are clearly seen in its third quarter financial results. The company expects to report net sales of approximately $1.259 billion compared to $1.878 billion in the year ago period, reflecting lower customer traffic and reduced levels of inventory availability, among other factors. Net loss for the quarter is expected at $385.8 million, including impairment charges of approximately $100 million, compared to a net loss of $276.4 million in the year ago period.
"Despite more productive merchandise plans and improved execution, our financial performance was negatively impacted by inventory constraints as we partnered with our suppliers to navigate both micro- and macro- economic challenges,” Gove said. “Reduced credit limits resulted in lower levels of in-stock presentation within the assortments that our customers expect. Consequently, 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."