Bed Bath & Beyond Inc said it was exploring options including a bankruptcy filing to address the U.S. home goods retailer’s plunging sales, dwindling cash and debt load, sending its shares tumbling.
The retailer in a regulatory filing on Thursday said there was substantial doubt about its ability to continue as a going concern, adding that it was exploring strategic alternatives including restructuring or refinancing debt or seeking bankruptcy protection.
Bed Bath & Beyond said it expects to report a third-quarter loss of $385.5 million after sales plunged 33 percent.
The company’s shares plummeted 23 percent to $1.84 in early trading on Thursday after the news.
Bed Bath & Beyond said it was exploring options including a bankruptcy filing to address the U.S. home goods retailer’s plunging sales, dwindling cash and debt load
The stock was one of the most active on the Nasdaq, with nearly 9.4 million shares traded as of 9:37 am.
Bed Bath & Beyond’s fortunes dwindled and its stock collapsed in value after it pursued a strategy focused on its own private-label goods.
The retailer’s management has since reversed course and has aimed to bring in national brands.
‘The turnaround plan put in place last year is not working. … Put bluntly the business is moving at rapid speed in the wrong direction with bankruptcy the most likely destination,’ GlobalData analyst Neil Saunders said.
The company became a meme stock last year when its shares soared more than 400 percent.
Activist investor Ryan Cohen, the chairman of GameStop Corp, took a stake in Bed Bath & Beyond, which he later sold, sending shares crashing.
Sue Gove was appointed as permanent CEO of Bed Bath & Beyond after taking over the position in an interim capacity back in June 2022. She said financial performance was ‘negatively impacted’ by inventory constraints
‘Our financial performance was negatively impacted by inventory constraints as we partnered with our suppliers to navigate both micro- and macro-economic challenges,’ Chief Executive Officer Sue Gove said.
The company will report results for the third quarter ending Nov 26 on Tuesday.
Bed Bath & Beyond in its prior financial update in the fall said it had liquidity of $850 million but had burned through $325 million in the second quarter.
Analysts have estimated that it will go through $1.5 billion in cash over the next two years.
The company had also been asking bondholders to swap out their holdings for new debt to give it more breathing room to turn around its business but canceled the deal on Thursday after not getting much interest from investors, according to filings made with the U.S. Securities and Exchange Commission.
Bed Bath & Beyond had earlier considered selling its valuable buybuy Baby stores that sell goods for infants and toddlers but held off in the hopes it could later fetch a higher price, Reuters reported.
The value of the chain helped the retailer ink a $375 million loan, the maximum amount it could borrow.
Gove took the reigns of the embattled company after a tumultuous year for the company which saw its former CFO plunge to his death in September 2022.
Gustavo Arnal, 52, was facing a billion dollar lawsuit just one week before he died for allegedly inflating the price of Bed Bath and Beyond shares in a get-rich-quick scheme
Arnal jumped to his death from the 18th floor of a 57-story building in Manhattan’s Tribeca in September 2022
The company was embroiled in a media frenzy Gustavo Arnal jumped to his death from New York City’s J’enga’ building.
At the time, Arnal was being sued for artificially inflating the company’s stock price in a ‘pump and dump’ scheme to sell off his shares at a higher price, DailyMail.com revealed in September.
Arnal was listed as one of the defendants in a class action lawsuit brought by a group of shareholders who claim they lost around $1.2billion.
The lawsuit, filed in the United States District Court for the District of Columbia on August 23, claims Cohen had approached Arnal about a plan to control shares of Bed Bath and Beyond so they could both profit.
As part of the plan, the lawsuit claims, Arnal ‘agreed to regulate all insider sales by BBBY’s officers and directors to ensure that the market would not be inundated with a large number of BBBY shares at a given time.’
He then allegedly issued ‘materially misleading statements made to investors regarding BBBY’s strategic company plans, financial condition… and reports of shares holding and selling’ to help increase share prices.
By the time Arnal sold over 42,000 shares in the company in August, it was valued at $1 million, according to MarketBeat.com.
The lawsuit was then filed just one week before Arnal took his own life by jumping from the 18th floor of the famous ‘Jenga’ tower in lower Manhattan’s Tribeca neighborhood.
The class action lawsuit was brought by Virginia resident Pengcheng Si on behalf of all those who purchased BBBY’s stocks between March 25 and August 18.