Bed Bath & Beyond's Losses Exceed Expectations as Bankruptcy Looms

Bed Bath & Beyond Inc. reported a wider net loss than expected on Tuesday, which underscores the likelihood that the company will file for bankruptcy within the next couple of months. As one of the largest US home-goods retailers, a bankruptcy filing would have a significant impact on the market.

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The retailer said its net loss widened to $393 million in the three months ended Nov. 26. Just last week, the company had said it expected to report a net loss of $386 million. That compares with a loss of $366 million in the second quarter. The company said on Tuesday that it is considering all options to get back on financial track. "We are exploring multiple paths and we are determining our next steps thoroughly," Bed Bath & Beyond Chief Executive Officer Sue Gove said in a statement.

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Last week, the retailer said that it was considering a range of options, including bankruptcy. This came after the company withdrew a bond-swap offering that it had launched in October in an attempt to reduce its debt burden. On Tuesday, the retailer said that it had about $200 million in cash on hand.

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Bed Bath & Beyond reported a 33% decline in net sales to $1.3 billion in the third quarter, in line with the preliminary results it published last week. The company said the plunge in sales was driven in part by its attempts to clear its private-label brands, part of a strategic pivot toward better-known national brands. Additional discounting also dinged revenue, the company said. The company had rolled out major promotions in a bid to drive traffic to its stores and website, but because of inventory problems, shoppers often couldn’t find what they needed.

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The retailer also said it is making progress on its plan to close 150 lower-performing stores. This is part of a broader effort to reduce costs.
"Our organization is more streamlined and we have adopted a more focused infrastructure that reflects our current business," Gove said in the statement. The company is targeting $80 million to $100 million in additional cost savings, which includes cuts to expenses and staff, she said. During a short results call Tuesday, she didn't provide details on how many employees might be affected. Gove said that the company is targeting $80 to $100 million in additional cost savings, which includes cuts to expenses and staff. She didn't provide details on how many employees might be affected during the short results call on Tuesday.

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Founded in 1971, Bed Bath & Beyond is a well-known retailer in the United States. According to Bloomberg News, the company is likely to file for bankruptcy protection within the first two months of this year. Bed Bath & Beyond was once a popular choice for college students and wedding registries, but has since lost some of its luster.
Bed Bath & Beyond's decline has been years in the making, and it has accelerated in recent months as suppliers have become increasingly concerned about the retailer's financial future and made demands to receive payments in advance. Other manufacturers have lowered their credit limits with the retailer in order to reduce the risk of not getting paid for their products.

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This has led to fewer goods on store shelves during the crucial holiday season, which has in turn made it harder to pay suppliers and exacerbated a vicious cycle of falling inventory levels and declining foot traffic.

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Gove acknowledged the challenges the company has faced during a recent call. "We experienced an acceleration in vendor payment terms and credit-line constraints," she said. "This led to lower receipts" and pushed in-stock levels down to around 70%. The lack of inventory hampered sales, she added. In recent weeks, the company has been able to get those levels above 80% in some categories'', Gove said, which has helped to drive more robust sales.

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"This underscores our ability to achieve results when we have the supply," Gove said on the call. The company's decision not to take any questions from analysts is unusual.
Shares of Bed Bath & Beyond rose as much as 13% to $1.83 in New York trading Tuesday. The stock was down 88% in the past year through Monday.