Bed Bath & Beyond files for bankruptcy protection after failed turnaround efforts

bed bath behind On Sunday, it filed for Chapter 11 bankruptcy protection after failing on several last-ditch attempts to raise enough money to keep the company afloat.

The beleaguered home goods retailer had been warning of possible bankruptcy since early January, when it issued a “continuance” notice that it might not have the money to cover expenses after a disastrous holiday season. Shares of the company closed at 29 cents on Friday, giving it a market value of $136.9 million. The stock is down about 88% this year. Last April, it was trading about $20 a share.

The company’s namesake 360 ​​and 120 Buybuy Baby stores will remain open for the time being as they begin closing business and liquidating assets. The company said in a statement that it has filed applications in New Jersey bankruptcy court asking permission to auction the trademarks. I’ve already committed to closing all Harmon FaceValue stores.

In late November, BedPath had assets of about $4.4 billion and debts of $5.2 billion, court filings show. Along with a long list of creditors, including sellers like Pinterest, Keurig and Blue Yonder, the company owes the most to BNY Mellon at $1.18 billion, documents show. The bank has total creditors between 25,001 and 50,000 and employs about 14,000 non-seasonal workers, court filings say.

“Millions of customers have trusted us with the most important milestones in their lives – from going off to college to getting married, settling into a new home to having a baby. Our teams have worked with amazing purpose to support and promote our beloved banners, crib and bed,” said Sue Goff, Bath & Beyond CEO and CEO. buybuy BABY’s statement.

Sixth Street has agreed to lend Bed Bath $240 million in debtor debtor financing so that the company can obtain the cash flow needed to support operations through the bankruptcy process. BedPath said it plans to continue paying employees wages and benefits, maintaining customer programs and fulfilling obligations to vendors.

Holly Itlin, a longtime retail transformation expert and partner and managing director with advisory group AlixPartners, has been named Bed Bath’s chief financial officer and chief restructuring officer, the filings say.

“Bed Bath and Beyond has finally resigned itself to the fact that its business is broken and has filed for bankruptcy,” said Neil Saunders, a retail analyst and consultant who serves as Managing Director of GlobalData.

“Although it’s been a long time coming, they simply couldn’t defy gravity forever,” he said.

Bed Bath has been hanging by a thread since January but has refused to go down without a fight. The company said it acquired what was at the time considered a Hail Mary stock offering in early February that was expected to inject more than $1 billion in equity into Bed Bath, but the plan fell through and only brought in $360 million.

At the end of March, Bid Path announced another stock offering that it hoped would bring in $300 million, but this news sent the stock price down, and he struggled to raise the money he hoped the offering would provide. As of April 10th, the company has sold approximately 100.1 million shares and raised just $48.5 million.

In the filings, the company warned if it didn’t raise the expected proceeds from the show, it would likely file for bankruptcy protection.

Days after announcing its second stock offering, BidPath said it had partnered with liquidation company Helco Global to boost its inventory levels. Under the agreement, Hilco’s ReStore Capital agreed to purchase up to $120 million in goods from the company’s major suppliers after relations with the Bed Bath sellers soured over liquidity issues.

However, the plans ultimately prove futile.

The retailer struggled to maintain relationships with its sellers and was grappling with low inventory levels, lagging sales and a rapidly dwindling cash pile.

With the holiday season approaching, Bed Bath has had difficulty keeping its shelves stocked, the company said in a securities filing, and because of liquidity issues, some vendors have begun asking for advance payments.

In late March, the company announced preliminary results for the fourth quarter of its fiscal year, with net sales of about $1.2 billion, and comparable-store sales down in the range of 40% to 50%. The company noted continued negative operating losses, although it said it had not depleted free cash flow.

The company reported $2.05 billion in revenue for the fourth quarter of 2021.

For years, Bed Bath has enjoyed healthy annual profits but not like the giants Amazon It came into the picture and began chipping away at the retailer’s market share, and its profits began to decline.

In the twelve months ending March 2, 2019, the company posted a net loss of $137 million and since then, it has been unable to get out of the red.

In October of that year, the company took advantage license plate Veteran Mark Tritton to be its CEO. He launched a powerful strategic change that favored private brands over national brands in an effort to boost retailers’ profits. Margins are higher for private-label brands A similar strategy worked at Target under Tritton’s leadership — but the merchandise shift failed to reach customers.

Furthermore, with a focus on private brands, many manufacturing and logistics fell under the responsibility of Bed Bath, which became increasingly difficult when the Covid-19 pandemic hit early the following year.

“If there’s one point of failure for Bed Bath and Beyond, it’s that the company has ceased to be relevant to consumers. That’s arguably going back a long way thanks to the rise of the Internet and improving home offerings at competitors like Target. In the face of this increased competition, Bed’s approach has found Bath and Beyond’s retail – which lacks inspiration – is insufficient,” said Saunders.

Saunders called Triton’s transformation efforts “poorly executed and inconsistent with what shoppers want”.

This past June, Bed Bath announced that it would replace Tritton with Gove. She then launched her ambitious transformation plan, which she hoped would save the business. However, it has struggled to repair its working relationship with major vendors and its turnaround efforts have coincided with rising inflation hurting consumer spending while rising interest rates slowed the housing market.

In addition, consumers who spent 2020 and 2021 staying at home and updating their living spaces amid the pandemic are now spending on travel, dining out, and other experiences outside the home.

The company has experienced more turmoil in the past year, including a brief engagement from activist investor Ryan Cohen over the summer and the suicide of Bed Path CFO Gustavo Arnal in September. In mid-January, the company was looking to find a buyer willing to keep it afloat with an infusion of cash. Soon, though, Pied Bath revealed in a securities filing that he did not have enough cash to pay off his debts and defaulted on his line of credit with JPMorgan.

The company was able to make interest payments using the financing gained from the initial stock offering, but warned at the time that it would “likely” have to file for bankruptcy and liquidate its assets if the deal did not go as planned.

The company obtained loans with JPMorgan and Sixth Street which was downgraded in late March after announcing its second stock offering. At that time, its total revolving commitment decreased from $565 million to $300 million, and its revolving credit facility was reduced from $225 million to $175 million. Under the discount credit agreements, Bed Bath was on the hook for monthly interest payments.

The company said it was trying to cut costs by cutting capital expenditures, closing stores and negotiating lease deals, but warned in filings that the effort “may not succeed.”

At the popular Bed Bath location in New York City, a since-layed employee told CNBC recently that workers were standing around not knowing what to do after the company abruptly cut off in-store pickup and on-site delivery.

The worker was told the liquidators would come the next day and soon learned they would not get a severance pay after more than two contracts with the company.

“It was very fast,” said the worker.