Bed Bath & Beyond defaults on loans, inching closer to bankruptcy

Bed Bath & Beyond defaulted on its loans and does not find the money for to repay what it owes, the retailer stated Thursday.

The dwelling items chain disclosed the default in a securities filing which stated it was contemplating alternate options — together with restructuring its debt in bankruptcy courtroom.

The submitting is not the primary time Bed Bath & Beyond hinted at bankruptcy. The firm warned earlier this month that there was “substantial doubt” it may keep in enterprise. The retailer just lately reported a 33% drop in sales and a widening loss for its fiscal third quarter that ended November 26, in contrast with the year-ago interval. 

CEO Sue Gove blamed the poor efficiency on stock constraints and lowered credit score limits that resulted in shortages of merchandise on retailer cabinets. Wall Street analysts and client conduct specialists instructed CBS MoneyWatch that Bed Bath & Beyond dedicated self-sabotage years in the past by failing to pivot to e-commerce quick sufficient, shopping for again an excessive amount of of its personal inventory and making an attempt to promote non-public label merchandise that customers did not like. 

The default discover “underlines the corporate resides on each borrowed money and time,” stated Neil Saunders, managing director of GlobalData, in a Thursday analysis word. “Short of a miracle within the type of a sale of a part of the enterprise or a mortgage from an investor, the most probably consequence is bankruptcy.”

A spokesperson for Bed Bath & Beyond instructed CBS MoneyWatch that the corporate has “a crew with confirmed expertise serving to firms efficiently navigate troublesome conditions and grow to be stronger.”

Still, turning round Bed Bath & Beyond is anticipated to be troublesome amid growing competitors from discounters. Its struggles come because the economic system is weakening and customers are tightening their purse strings.

Bed Bath & Beyond skilled a wave of investor recognition final 12 months as Ryan Cohen, the billionaire founding father of on-line pet meals firm Chewy, purchased greater than 7 million shares within the firm. He sold those shares last August in a transfer that netted him $178 million and triggered a large selloff amongst meme inventory buyers. The firm made headlines once more in September when its former chief monetary officer died unexpectedly after leaping from a skyscraper in New York. 

The New Jersey-based retailer has been making an attempt to flip issues round and slash prices after earlier administration’s methods worsened a gross sales droop. The firm introduced in August it would close about 150 of its stores and slash its workforce by 20%. It additionally lined up greater than $500 million in new financing.

Bed Bath & Beyond’s inventory worth fell 22% on Thursday to $2.52 a share.