Bed Bath & Beyond Warns of Possible Bankruptcy
Bed Bath & Beyond, the beleaguered home goods retailer, warned investors on Thursday about the darkening prospects for its future, saying that bankruptcy was a possible option.
The company, which has roughly 900 stores across the country, reported preliminary earnings, noting lower sales and slower foot traffic compared with the prior year. The company said its sales were about $1.3 billion for the quarter ending Nov. 26, about a third lower than the year before. The period included the run-up to Black Friday.
The retailer estimated that it would record a loss of $386 million in its latest quarter, much worse than the $276 million loss in the previous year, and said it would need more time than expected to close its books. The company’s share price tumbled more than 20 percent in early trading on Thursday.
“The company has concluded that there is substantial doubt about the company’s ability to continue as a going concern,” Bed Bath & Beyond said in a statement.
Bed Bath & Beyond, known to many shoppers for its distinctive and seemingly inescapable blue and white coupons, has struggled for years to compete with the likes of Amazon, as more shoppers went online for every day home products.
The retailer laid out an aggressive plan in August to turn itself around that included 150 store closings, cost cuts and layoffs. The attempted turnaround is being led by Sue Gove, who formally took over in October after the abrupt departure of its prior chief executive, Mark Tritton, in June.
Bed Bath & Beyond has been working to mend ties with suppliers who have lost confidence in the company, which had about 1,000 stores before its latest restructuring. Bed Bath & Beyond employed 32,000 people as of February 2022, and said in October it had closed about half of the stores it planned to shut.
It has dealt with other instances of inner turmoil, as a series of activist investors, including the meme stock favorite Ryan Cohen, have pushed for changes on its board. Mr. Cohen sold his stake in the company in August, plunging its shares down 40 percent.
In September, its chief financial officer, Gustavo Arnal, died in a death that was ruled a suicide. Laura Crossen, the retailer’s chief accounting officer, has since been serving as interim financial chief.
That Bed Bath & Beyond struggled during a period that encompassed Black Friday was an ominous sign. The holiday season is a crucial one for retailers, and initial data shows that American consumers feeling the pinch from inflation were still willing to spend. U.S. retail sales increased 7.6 percent from the prior period of Nov. 1 to Dec. 24, according to Mastercard Spending Pulse. Online sales increased 11 percent, and accounted for more than a fifth of total holiday retail spending.
Ms. Gove emphasized her focus on a turnaround on Thursday, stating the company continues to look at improving its inventory, online operations and financial position.
But those efforts will take time, Ms. Gove said. Despite “more productive merchandise plans and improved execution,” she said suppliers had continued to hold back, resulting in lower levels of in-stock items.