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Bed Bath & Beyond Bankruptcy Could Be Just Days Away

The bad news for Bed Bath & Beyond seems to be getting worse. According to a report from Reuters, sources close to the matter said that the struggling home goods retailer is preparing for a bankruptcy protection filing in the coming weeks and considering skipping debt payments due Feb. 1. Distressed companies on the verge of bankruptcy often make this move to conserve cash.

According to securities filings, Bed Bath & Beyond has interest payments on around $1.5 billion of bonds due Feb. 1. Should the company opt to skip those payments, it would likely enter a 30-day grace period before the retailer officially defaults, Reuters sources said.

This comes a day after Bed Bath & Beyond filed a motion with the United States Securities and Exchange Commission (SEC) requesting additional time for completion of its quarter-end close procedures for the third quarter of fiscal 2022, which ended Nov. 26, 2022. That filing identified bankruptcy as one of the strategic alternatives the company is looking at, along with restructuring or refinancing its debt, seeking additional debt or equity capital, reducing or delaying business activities and strategic initiatives, selling assets, or other strategic transactions or measures. 

The same day, Bed Bath & Beyond announced via a press release Thursday that it anticipates net sales of approximately $1.259 billion for the third quarter of fiscal 2022 compared to $1.878 billion during the same period a year ago. The retailer blamed lower customer traffic and reduced levels of inventory availability, among other factors. Some vendors last year said they stopped shipping to the retailer because it had problems paying invoices.

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In that same release, Bed Bath & Beyond said it anticipates a net loss of approximately $385.8 million for the third quarter, including impairment charges of approximately $100.0 million, compared to a net loss of $276.4 million in the year ago period. SG&A Expense is expected to be approximately $583.6 million compared to approximately $698.0 million in the year ago period, driven by the execution of cost optimization initiatives to right-size the company’s expense structure. The company’s third-quarter earnings call is scheduled for Jan. 10.

“Despite more productive merchandise plans and improved execution, our financial performance was negatively impacted by inventory constraints as we partnered with our suppliers to navigate both micro- and macro- economic challenges,” said Sue Gove, president and CEO of Bed Bath & Beyond. 

Earlier this week, an SEC filing from September 2022 questioning whether Bed Bath & Beyond had implemented any risk mitigation strategies to remedy supply chain issues became public, causing the retailer’s stock to plummet. Bed Bath & Beyond stock ended down 30 percent on Jan. 5 at $1.69 and had dropped to $1.30 by this afternoon.