Bed Bath & Beyond stores: Company warns about bankruptcy as sales slump

NEW YORK — Fighting bed bath & Beyond warned on Thursday that the homewares retailer may have to file for bankruptcy as sales continue to fall and it struggles to attract shoppers.

The Union, New Jersey-based company said it was considering several options, including selling assets or restructuring its business in bankruptcy court, but acknowledged that even those efforts may not be successful. Shares lost a quarter of their value on the news to trade at $1.82, the lowest since November 1992.

“There are significant doubts as to the company’s ability to continue as a going concern,” the retailer said in a statement.

The company’s assessment came as its dismal performance continued through the holiday season.

bed bath & Beyond expects net sales of $1.26 billion for the third quarter ended November 26. That would be a 32% decrease from the previous year. It also expects a net loss of about $385.8 million for the third quarter, up from the loss of $276.4 million in the same period last year.

The company’s recently appointed CEO and President, Sue Gove, attributed the poor performance to inventory constraints and reduced credit limits, which led to shortages of merchandise on shelves.

In August Bed Bath & Beyond announced it would close stores and lay off employees to get the ailing business back on track. It closed about 150 of its namesake stores and reduced its workforce by 20%. It was estimated that these cuts would save the company $250 million in its current fiscal year. It also announced in August that it had raised more than $500 million in new funding.

In an ongoing sales slump, the company announced back in August that it would return to its original strategy of focusing on national brands rather than pushing its own private labels.

That reversed a strategy of former CEO Mark Tritton, who was ousted last June after less than three years at the helm. It said it would get rid of a third of its own brands, which had been launched in the last year or so. Next to bed bath & Beyond, the company also operates the buybuy Baby and Harmon chains.

Neil Saunders, managing director of GlobalData Retail, wrote in a report on Thursday that Bed Bath & Beyond is “too far away to be saved in its current form”. He noted that the company could undergo a Chapter 11 reorganization, but it has yet to come up with a credible plan to reinvent the business, and that will be challenging, especially in a weakening economic environment.

“A catalog of missteps has bankrupted the company and rendered it increasingly irrelevant,” he wrote. “Only very radical measures will allow him to survive, and even if he does, he will be but a shadow of his former self.”

The company is expected to release final third-quarter results on Tuesday.

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https://6abc.com/bed-bath-and-beyond-bankruptcy-sales-shopping/12658536/ Bed Bath & Beyond stores: Company warns about bankruptcy as sales slump

Alley Einstein

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