January 5 (Reuters) – Bed Bath & Beyond Inc. (BBBY.O) Those familiar with the matter are poised to seek bankruptcy protection in the coming weeks after weak sales and an inability to compete with major online and major retailers.
The US household goods retailer is considering skipping debt payments due on Feb. One source said on January 1 that it was a typical move that distressed companies on the brink of bankruptcy took to save cash.
Shares of the retailer, once a category-killer in products such as small appliances and bed linens, fell 30% to $1.69 on Thursday after the company said it expected to report significant losses in the third quarter and there were significant doubts about its capability. continue as an ongoing business.
The company said it was exploring a number of options to address its falling sales, including declaring bankruptcy. The retailer said it has not made a final decision on which route to take.
Bed Bath & Beyond did not immediately comment on any bankruptcy preparations beyond its Thursday disclosure.
The company has interest payments on approximately $1.5 billion in bonds due on Feb. 1, according to securities files. People are considering skipping the payment to save cash, which will likely trigger a 30-day grace period before the company officially defaults.
Troubled retailers often seek bankruptcy protection after the holiday season to take advantage of the cash cushion provided by recent sales. One source said that if the company seeks bankruptcy protection, it will likely seek funding from existing creditors to assist in the court restructuring process.
The retailer’s fortunes took a turn for the worse after it pursued a strategy that focused on its own private label products. Management has since reversed course to bring in national brands recognized by shoppers.
But on Thursday, there were signs that this strategy, too, had failed, as the company reported that it expected to post a loss of $385.5 million for the quarter ended November 1, after sales fell 33%. 26, due to lower customer traffic and lower stock availability levels, among other factors.
The company is scheduled to report full third-quarter results on Tuesday.
“The turnaround plan put in place last year isn’t working. … To put it bluntly, the business is moving fast in the wrong direction and the most likely target is bankruptcy,” said GlobalData analyst Neil Saunders.
Sources familiar with the matter said that Bed Bath & Beyond has commissioned returns and consulting firm AlixPartners LLP to help advise on options to address their financial woes.
In addition to AlixPartners, the company is advised by restructuring lawyers at Kirkland & Ellis LLP and investment bankers at Lazard Ltd. (LAZ.N)said one of the people.
AlixPartners and Lazard declined to comment. Kirkland did not immediately respond to a request for comment. Bed Bath & Beyond told Reuters late Thursday that it was “working with strategic advisors to consider all avenues to regain market share and increase liquidity,” but could not comment further on specific relationships.
became the company meme stock when its shares rose more than 400% last year. Activist investor Ryan Cohen, chairman of GameStop Corp. (GME.N)bought a stake in Bed Bath & Beyond, which he later sold. stocks crash.
Bed Bath & Beyond in its previous financial update for the fall I said It had $850 million in liquidity but burned $325 million in the second quarter.
According to filings with the U.S. Securities and Exchange, the company also asked bondholders to replace their holdings with new debt to give them more breathing room to spin their businesses, but canceled the deal on Thursday because it didn’t receive much interest from investors. Commission.
Bed Bath & Beyond had previously considered selling valuable Buy Baby stores selling products for babies and toddlers, but delayed it in hopes that it could bring a higher price later, Reuters reported.
Michael Baker, senior research analyst at DA Davidson, said buybuy Baby is the company’s “crown jewel” asset and would likely attract the most attention from buyers if the parent company decides to sell it as part of its restructuring efforts. and business valuation.
The value of the chain helped the retailer Inc. and a loan of $375 million, which was the maximum he could borrow last year.
News by Aishwarya Venugopal from Bengaluru and Siddharth Cavale from New York; Editing: Shounak Dasgupta, Subhranshu Sahu, Mark Porter and Anna Driver
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