After months of speculation that it would file for bankruptcy, Bed Bath & Beyond announced on Sunday that it would begin winding down operations as it commences Chapter 11 proceedings.
To facilitate this process, the company said it has received a commitment of approximately $240 million in debtor-in-possession financing from Sixth Street Specialty Lending, Inc. Following court approval, the company expects this financing to provide the necessary liquidity to support operations during the Chapter 11 process.
While the company has commenced a liquidation sale, Bed Bath & Beyond Inc. intends to use the Chapter 11 proceedings to conduct a limited sale and marketing process for some or all of its assets.
In the event of a successful sale, the company will pivot away from any store closings needed to implement a transaction, Bed Bath & Beyond added.
The company added that its 360 Bed Bath & Beyond and 120 Buybuy Baby stores and websites will remain open and continue serving customers as it begins its efforts to effectuate the closure of its retail locations.
Sue Gove, president and CEO of Bed Bath & Beyond Inc., said in a statement that the company’s teams have “worked with incredible purpose to support and strengthen our beloved banners.”
“We deeply appreciate our associates, customers, partners, and the communities we serve, and we remain steadfastly determined to serve them throughout this process,” said Gove. “We will continue working diligently to maximize value for the benefit of all stakeholders.”
Originally reported on Jan. 5, 2023:
Bed Bath & Beyond issued a dire warning about the future of its business on Thursday.
The home goods retailer said in a statement that it has concluded that there is “substantial doubt” about the company’s ability to continue as a going concern.
The company added that it continues to consider all “strategic alternatives” including restructuring or refinancing its debt, seeking additional debt or equity capital, reducing or delaying the company’s business activities and strategic initiatives, selling assets, or filing for bankruptcy. “These measures may not be successful,” the statement said.
This warning was a part of a larger business update released by the struggling retailer on Thursday. In the update, Bed Bath & Beyond said for the third quarter of fiscal 2022 it expects to report net sales of approximately $1.259 billion compared to $1.878 billion in the same quarter last year, reflecting lower customer traffic and reduced levels of inventory availability, among other factors.
The company also anticipates a net loss of approximately $385.8 million for the third quarter of fiscal 2022, including impairment charges of approximately $100.0 million, compared to a net loss of $276.4 million in same time last year, the update said.
But given its recent business performance, the company added in the update that it needs more time to complete its quarter-end close procedures and has filed a Notification of Late Filing with the Securities and Exchange Commission.
Sue Gove, president & CEO of Bed Bath & Beyond, said in a statement that today’s announcement “underscores the importance of having initiated a turnaround at the start of the third quarter.”
“Our plan has two anchors: the first enables us to refocus merchandising and inventory, operate more efficiently, and grow our digital and omni-capabilities, and the second focuses on strengthening our financial position,” Gove said. “Transforming an organization of our size and scale requires time, and we anticipate that each coming quarter will build on our progress.”
Gove went on to state that despite “productive merchandise plans” and “improved execution,” the company’s financial performance was negatively impacted by inventory constraints, while reduced credit limits resulted in lower levels of in-stock presentation within its assortments. “Consequently, we have already leveraged the liquidity gained from the holiday season to immediately pursue higher in-stock levels with support from our key vendors,” Gove added. “We have seen trends improve when in-stock levels have increased.”
Gove said she looks forward to providing a further update on the company’s formal third quarter earnings call next week.
This news comes just months after the retailer laid out a new turnaround strategy. As part of the plan, the company announced it secured financing commitments for more than $500 million, including its newly expanded $1.13 billion asset-backed revolving credit facility and a new $375 million “first-in-last-out” facility.
The turnaround also including “further reduction in capital spending.” which resulted in Bed Bath & Beyond cutting corporate and supply chain staff by 20%. This move, the company said, would reduce its expenses by approximately $250 million in fiscal 2022.
The company added in the plan that it had identified and commenced the closure of approximately 150 lower-producing Bed Bath & Beyond banner stores, and “continues to evaluate” its portfolio and leases, in addition to staffing, to ensure “alignment” with customer demand and its new go-forward strategy.
