Skip to main content

SEC Asks Bed Bath & Beyond to Explain Itself

Bed Bath & Beyond took another stock hit this week after a request from the Securities and Exchange Commission (SEC) filed on Sept. 27 was made public. The request sought to clarify how supply chain disruptions impacted the retailer’s operations during the second half of the fiscal 2022 year. The SEC also inquired as to whether Bed Bath & Beyond had implemented any risk mitigation strategies in response to those supply chain issues.

Bed Bath & Beyond‘s response confirmed that supply chain challenges and delays on top of higher freight costs resulted in net sales falling by $275 million while gross margins contracted between 3 and 4 percentage points in the fourth quarter. But the retailer hasn’t taken any specific mitigation actions since it has focused on adjusting its import strategy to source a more significant proportion of its owned brands from domestic suppliers.

“The company does not believe at this time that there is any material direct long-term impact of the fiscal 2021 supply chain disruptions, and thus no significant mitigation efforts have been undertaken,” interim chief financial officer Laura Crossen wrote in a letter dated Nov. 7.

Bed Bath & Beyond added several new risk factors related to supply chain disruption to its quarterly filings starting in the second quarter of 2022. The Union, N.J. company will also include more consistent information on its key operating metrics across its quarterly and annual filings, following the SEC’s request to provide supplemental information in news releases to the regulatory agency.

Related Stories

In November, several of the company’s suppliers told Bloomberg that they were halting or restricting shipments to Bed Bath & Beyond due to payment issues.

“We requested to alter our payment terms to payment in advance and they said no— politely,” Dbest Products CEO Richard Elden told Bloomberg. “We’d rather keep our product for customers that we expect will pay us with no issues and no problems.”

That move came after Bed Bath & Beyond hosted 500 vendors for a summit to reassure them that the company had caught up on its missed payments. One source of funding for merchandise shipments is the $500 million Bed Bath & Beyond secured in financing in September for incremental liquidity, including an expanded asset-based loan facility of $1.13 billion and $375 million in the form of a first-in, last-out loan.

Bed Bath & Beyond announced that it will hold its fiscal 2022 third quarter earnings call on Jan. 10. The company’s stock has lost 83 percent of its value over the past year after multiple quarters of losses, downgrades by credit rating firms and leadership changes including the dismissal of former CEO Mark Tritton and the untimely death of former finance chief Gustavo Arnal.