Beleaguered retailer Bed Bath & Beyond could be filing for bankruptcy in the coming weeks as the company’s debt levels rise and payments are missed.
The company has not found a buyer ahead of a potential bankruptcy filing and is running out of cash and time to increase its liquidity. The company could file for Chapter 11 protection within a few weeks, two sources told the New York Times.
A retailer that sells household goods at about 900 stores nationwide, Bed Bath and Beyond failed to pay some debt payments, according to a U.S. Securities and Exchange Commission filing on Jan. 26. The company said it received a default notice from JPMorgan Chase over a credit agreement.
Bed Bath & Beyond, which soared as one of original meme stocks in 2021 before crashing back to earth, has already told investors it was considering bankruptcy protection as its efforts to ramp up cash flow has not been successful. Revenue from the holiday season did not yield the gains that the retailer sought as shoppers turned their attention elsewhere.
“At this time, the Company does not have sufficient resources to repay the amounts under the Credit Facilities and this will lead the Company to consider all strategic alternatives, including restructuring its debt under the U.S. Bankruptcy Code,” according to the regulatory filing.
The retailer had said it could close more stores, including distribution centers and obtain either more debt or equity capital in an effort to boost its liquidity, the filing said.
The day after Bed Bath & Beyond announced its plans in the filing, the company said it would shutter another 87 stores and close its chain of Harmon drugstores, according to a spokesperson. As of February 2022, the company operated about 50 Harmon stores. In August the company said it would close 150 that were underperforming.
The company also said Jan. 27 that five of its Buybuy Baby stores would also close.
Bed Bath & Beyond laid off 20 percent of its workforce as its shares plunges
The company had a workforce of 32,000 employees as of February 2022. Last August the retailer laid off 20 percent of its corporate and supply chain employees.
Investors have punished the retailer by offloading shares and Bed Bath & Beyond stock fell by 82.3 percent during the past year leaving it with a market capitalization of $336 million.
Bed Bath & Beyond has been in discussions with Sycamore Partners to divest its holdings, in a potential bankruptcy filing.
S&P Global downgraded Bed Bath & Beyond’s credit rating to “D” from “CC” on Jan. 27 and said it predicts the company will seek a debt restructuring.
“As we consider all paths and strategic alternatives, we continue to work with our advisors and implement actions to manage our business as efficiently as possible,” said Julie Strider, a Bed Bath & Beyond spokeswoman. “As is our practice, we do not comment on speculation. We will update all stakeholders on our plans as they develop and finalize.”
Losses widened during the third quarter to $393 million, an increase of 42 percent from the same quarter in 2022. Net sales declined to $1.3 billion or a 33 percent decline from a year ago, the company reported in January.