Bed Bath & Beyond worried about bankruptcy as sales continue to slump
NEW YORK (AP/KDKA) -- Beleaguered Bed Bath & Beyond warned on Thursday that it may need to file for bankruptcy protection as it struggles to attract shoppers.
The Union, New Jersey-based home goods retailer said that it's looking at several options, including selling assets or restructuring its business in bankruptcy court. But it acknowledged that even those efforts may not be successful.
Its stock fell 30% and ended Thursday at $1.69, its lowest level since November 1992.
"There is substantial doubt about the company's ability to continue as a going concern," the retailer said in a statement.
The company's assessment came as its dismal performance extended through the holiday season.
Bed Bath & Beyond said 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, wider than its loss of $276.4 million in the year-earlier period.
The company's recently appointed CEO and president, Sue Gove, blamed the poor performance on inventory constraints and reduced credit limits that resulted in shortages of merchandise on store shelves.
In August, Bed Bath & Beyond announced it would shutter stores and lay off workers in a bid to turn around its 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 in August that it had lined up more than $500 million of new financing.
Five Bed Bath & Beyond locations remain in Western Pennsylvania -- including in Cranberry Township and at The Waterfront. The store on on McKnight Road in Ross Township closed its doors last year.
Mired in a prolonged sales slump, the company also announced back in August that it would revert to its original strategy of focusing on national brands, 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. The company 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. Besides Bed Bath & Beyond, the company also runs the buybuy Baby and Harmon chains.
Neil Saunders, managing director of GlobalData Retail, wrote in a report Thursday that Bed Bath & Beyond is "too far gone to be saved in its present form." He noted that the company could restructure under Chapter 11, but it would still need to come up with a credible plan to reinvent the business, and that is going to be challenging, particularly in a weakening economic environment.
"A catalogue of missteps has run the company into the ground and has made it increasingly irrelevant," he wrote. "Only very radical action will allow it to survive and even if it does, it will be a shadow of its former self."
The company is set to release final third-quarter results on Tuesday.