Bed Bath & Beyond says it might file for bankruptcy protection
Bed Bath & Beyond is considering declaring bankruptcy as the New Jersey-based retailer looks for ways to pare its debt.
The home goods seller said in a news release that "there is substantial doubt about the company's ability to continue as a going concern" and that it is exploring a range of strategic alternatives, including selling assets, seeking additional capital or seeking bankruptcy protection.
Shares of Bed Bath & Beyond, which jumped in 2021 as traders embraced the so-called meme stock, fell more than 20% in early trade. The company said it expects a net loss of $385.8 million in its fiscal third quarter.
Bed Bath & Beyond was scheduled to report third-quarter earnings next Tuesday, but company officials said Thursday they need more time to finish calculations.
The company expects to report $1.2 billion in profit for the third quarter ended November 26, a 32% drop from a year earlier. It also anticipates a net loss of nearly $386 million, a steeper dip than its loss of $276 million in the year-earlier period.
New focus on online sales
CEO Sue Gove blamed the poor performance on "lower customer traffic" and inventory constraints that resulted in shortages of merchandise on the shelves. Gove said top executives have a two-pronged strategy for revamping Bed Bath & Beyond, which includes focusing on digital and improving company finances.
"Transforming an organization of our size and scale requires time, and we anticipate that each coming quarter will build on our progress," she said in a statement.
Bed Bath & Beyond announced in August 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. It also said in August that it had lined up more than $500 million of new financing.
Mired in a prolonged sales slump, the company also announced in August that it would revert to its original strategy of focusing on national brands, instead of pushing its own store labels.
"Catalogue of missteps"
Bed Bath & Beyond is "too far gone to be saved in its present form," Neil Saunders, managing director of GlobalData Retail, wrote in an analyst report Thursday. Declaring Chapter 11 bankruptcy is one option, but the company would still need to devise a plan for reinventing the business — a task that might be tough in today's economy, Saunders said.
"A catalogue of missteps has run the company into the ground and has made it increasingly irrelevant," he said in the report. "Only very radical action will allow it to survive and even if it does, it will be a shadow of its former self."
Bed Bath & Beyond experienced a wave of popularity last year as Ryan Cohen, the billionaire founder of online pet food company Chewy, bought more than 7 million shares in the company. He sold those shares last August in a move that netted him $178 million and caused a wide selloff among meme stock investors.
The company made headlines again in September when its former chief financial officer died unexpectedly after jumping from a skyscraper in New York.
The Associated Press contributed to this report.