Bed Bath & Beyond said in a filing with the Securities and Exchange Commission (SEC) on Thursday that it is doubtful it could continue operating the business — i.e., the company is staring down bankruptcy.
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Based on “recurring losses and negative cash flow from operations… as well as current cash and liquidity projections, the Company has concluded that there is substantial doubt about the Company’s ability to continue,” it wrote in the filing.
Still, the company is trying to get out of the hole.
But according to Insider, there’s another problem: Inventory levels are low, with stock at 53% for the end of last month, compared to 61% at Kohl’s for example, per DataWeave, an e-commerce analytics company.
This was due to Bed Bath & Beyond’s lack of credit to purchase inventory, said Bobby Griffin, an analyst at Raymond James, per Insider.
It’s a vicious cycle — low inventory could mean lower sales.
After 27 years of positive growth, Bed Bath & Beyond began to have problems in 2018, per a podcast from The Wall Street Journal. The chain was founded in 1971.
A new CEO, Mark Tritton, who took over the chain in 2019, focused on “private label” brands made by the store itself and hurried a host of them to market. During the home goods boom of 2020, sales were up, seeming to advocate for his strategy.
Then, later in 2021, sales began to tank. The products, as the podcast noted, were not well thought out nor of high quality. Tritton was pushed out in June.
Bed Bath & Beyond now has some $3 billion in debt on its balance sheet as of March, per The New York Times, and is low on cash and time for new CEO, Sue Gove, to make large-scale changes.
The company also announced in September it would cut 20% of jobs and close 150 stores. The holiday season didn’t provide hoped-for capital to rescue the business, one expert told the paper.
“Before Christmas, there was just a glimmer of hope,” said Neil Saunders, managing director of GlobalData, per the outlet. But, he added, “things have just got worse.”
The company in its preliminary quarterly data said it expected to report a $385.8 million loss for the quarter ending in November 2022.
The company also had a meme stock moment, where renegade investors take on a stock that is not performing well and kick Wall Street in the process, in August 2022 and in 2021, but the company’s stock is way back down to earth, trading at just $1.31 a share Friday afternoon, compared to $13.80 around this time last year.
And things in stores are not looking good, as Insider noted. The company has just 39% inventory availability in lighting and kitchen. The company also cited inventory issues as a reason it is considering bankruptcy in its SEC filing.
Bankruptcy, however, could still mean the chain sticks around. The process often gives companies a chance to restructure.
“What we’ve seen many times is that it ends up being a stay of execution,” Michael Baker, who studies retail at investment banking firm D.A. Davidson, told The New York Times.
“Sometimes that works, but oftentimes you see an announcement of scaling back and having fewer stores, and then that’s followed by a complete liquidation,” he added.
