A “Store Closing” banner at the Bed Bath & Beyond store in Farmingdale, New York on Friday, January 6, 2023.
Johnny Milano | Bloomberg | Good pictures
Bed Bath & Beyond filed for Chapter 11 bankruptcy protection on Sunday after repeated attempts to raise enough stock to keep the business afloat failed at the eleventh hour.
The struggling home goods retailer is warning of a bankruptcy in early January. “Worry going” notification After a bad holiday season, you may not have the money to cover expenses.
“Bed Bath & Beyond Inc. today announced that it is conducting a limited marketing process to solicit interest in the sale of some or all of its assets,” A statement was read on Sunday.
“While the company’s 360 Bed Bath & Beyond and 120 buybuy BABY stores and websites will remain open and continue to serve customers, the company will begin efforts to close its retail locations.”
Bed Bath has been hanging on by a thread ever since, but refuses to go down without a fight. It secured what was supposed to be a Hail Mary stock offering in early February that was expected to pay more than $1 billion in stock in Bed Bath, but the plan faltered and netted only $360 million, the company said.
At the end of March, BetBath announced another stock offering that it hoped would bring in $300 million, but the news sent the stock price tumbling and it struggled to raise the funds it had hoped to provide. As of April 10, the company had sold approximately 100.1 million shares and raised just $48.5 million.
In the filings, the company warned that if it doesn’t deliver expected returns, it may have to file for bankruptcy protection.
Days after the second share offering was announced, Bed Bath said it had partnered with liquidator Hilco Global to increase its inventory. Under the deal, Hilco subsidiary ReStore Capital agreed to buy up to $120 million in inventory from the company’s key suppliers after its cash flow problems strained relationships with Bed Bath’s vendors.
However, the plans ultimately proved futile and insufficient to keep the lights on.
The retailer has struggled to maintain relationships with its vendors and is struggling with low inventory levels, lagging sales and a fast-dwindling cash pile.
During the holiday season, Bed Bath had difficulty stocking its shelves and because of its cash flow problems, some vendors began paying in advance, the company said in securities filings.
CEO Sue Crowe said she hoped the business could be saved, but those efforts coincided with high inflation, while rising interest rates hit consumer spending.
Additionally, consumers who stayed at home and updated their living space amid the pandemic are now spending 2020 and 2021 on travel, dining out, and other out-of-home experiences.
By mid-January, the company had found a buyer and was ready to float it with an infusion of cash. Soon, however, Bed Bath revealed in a securities filing that it did not have enough cash to pay its debts and defaulted on its line of credit with JP Morgan.
The company was able to make its interest payments using funds from the initial public offering, but at the time it warned it would have to file for bankruptcy and liquidate its assets if the deal didn’t go as planned.
The company had debts with JPMorgan and lender Sixth Street, which were reduced in late March after its second stock offering was announced. During 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 reduced loan agreements, Bed Bath was on the hook for monthly interest payments.
The company said it is trying to cut costs by cutting capital expenditures, closing stores and renegotiating lease deals, but warned in filings that the efforts “may not be successful.”
At a popular Bed Bath outpost in New York City, a laid-off employee recently told CNBC that workers were left wondering what to do after the company suddenly stopped in-store pickup and deliveries at the location. The worker was told that the liquidators would come the next day and that the workers would not be cut off after more than two decades with the company.
“It was too fast,” the worker said.