bed bath behind On Thursday, she warned that she is running out of cash and is considering bankruptcy.
The retailer, citing worse-than-expected sales, issued a “continuity” warning that in the coming months it would not have the cash to cover expenses, such as leases or payments to suppliers. BedPath said it is exploring financial options, such as restructuring, seeking additional capital or selling assets, in addition to possible bankruptcy.
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Shares of the company fell about 30% to close the day at $1.69 after BedPath issued updates in a pair of financial filings. The stock earlier touched a 52-week low earlier in the day. Its market value fell to about $149 million as of Thursday’s close.
The Bed Bath & Beyond store is seen on June 29, 2022 in Miami, Florida.
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However, CEO Sue Goff said the retailer is focused on rebuilding the business and making sure its brands, Bed Bath & Beyond, Buybuy Baby and Harmon, “remain preferred destinations for customers into the future.”
Among its challenges, Bed Bath said it’s having trouble getting enough merchandise to fill its shelves and attract fewer customers to its stores and website.
The retailer also said it was unable to refinance a portion of its debt, less than a month after notifying investors that it planned to borrow more in order to pay off parts of existing liabilities.
Pied Bath’s debt load was weighing heavily on the firm. The retailer holds nearly $1.2 billion in unsecured notes, which have maturity dates spread over 2024, 2034, and 2044. In recent quarters, Bed Bath warned that it has been rapidly spending through cash.
All of Bed Bath’s notes circulated below par, a sign of financial distress.
Bed Bath has gone through a particularly tumultuous stretch, with the departure of its CEO and other senior executives, company-wide layoffs, store closings, and an overhaul of its merchandise strategy. With sales declining, CEO Mark Tritton was fired in June. Goff, who took over as interim CEO, took over the position permanently.
I made a strategy to come back in late August. As part of the plan, she said the company would cut costs by downsizing the store and workforce. Moving away from an aggressive private label strategy, Jove said it would add more items from popular national brands. It said it had secured more than $500 million in new funding to help stabilize the business.
The company said during its most recent earnings report that it believes it has sufficient liquidity going forward.
In a press release Thursday, Goff said recent sales results show why this turnaround plan is so important.
“Transforming an organization of its size and scale takes time, and we expect each quarter to build on our progress,” she said.
The company is also looking for a chief financial officer following the suicide death of CEO Gustavo Arnal in September.
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So far, Bed Bath has not seen changes in its sales trends. Net sales in the third quarter of the fiscal year ending November 3rd. 26, is expected to be about $1.26 billion — down sharply from $1.88 billion in the year-ago period, the company said.
It expects a net loss of about $385.8 million for the third quarter, up nearly 40% in losses year-over-year. Quarterly losses include approximately $100 million in impairment charges, which have not been identified.
The company is scheduled to report full quarterly results and hold an earnings call on Tuesday.
Signs of Bed Bath’s financial strain are showing up on store shelves, too. As the retailer’s cash chests dwindle, some suppliers don’t want to ship large quantities of merchandise—or in some cases, any merchandise—to the company.
Lowering credit limits mean customers see empty shelves and less variety than they expected, Goff said in a press release. She said the company is using the money it made during the holiday season to pay sellers and order more inventory.
“We’ve seen trends improve when inventory levels have increased,” she said.
Bed Bath already has a history of strained relationships with major national brands, such as Dyson, Keurig, and Cuisinart. During previous holiday seasons, Bed Bath didn’t have popular gifts, like KitchenAid mixers. Meanwhile, those items were plentiful in competitors such as license plate.