Bed Bath & Beyond Calls for a Reverse Stock Split

Bed Bath & Beyond (BBBY) has yet another plan to keep the struggling retailer afloat: a reverse stock split. 

CEO Sue Gove announced a special shareholder meeting to vote on a plan to split the stock in a range of 1-for-10 to 1-for-20, with the exact ratio to be determined by the board. The vote is set for May 9, and only shareholders of record before the cutoff of March 27 will be eligible to cast ballots. Gove added that if the proposal doesn’t have enough support, the special meeting could be adjourned to solicit additional proxies. 

Bed Bath & Beyond noted in a regulatory filing that the reason for the move was because the company “needs to raise equity capital to have the necessary cash resources to fund operations and service obligations.” It warned that if shareholders reject the plan, “it will likely force us to file for bankruptcy.”

If you think you've read that before, that’s because this is the third time this year Bed Bath & Beyond has said bankruptcy was imminent unless it received an immediate cash infusion. The previous two times, in January and the end of March, came as the company reported that it would be selling stock to raise the needed capital. Bed Bath & Beyond noted in the current filing that the reverse stock split would boost the price of shares and make them more attractive to investors, helping raise more money in its current stock sale.

Sales Boost

In addition to the stock moves, Bed Bath & Beyond is hoping to increase revenue by boosting sales, announcing a vendor consignment agreement yesterday that will put as much as $120 million worth of merchandise on its store shelves.

However, as was the case with yesterday’s news, today’s announcement didn’t help the stock price. Shares of Bed Bath & Beyond tumbled 8% to another all-time low.