Bed Bath & Bankruptcy

Shares tank as company says cites `substantial doubt' about whether it can continue

Person walking into a Bed Bath and & Beyond

Michael M. Santiago / Getty Images

Bed Bath & Beyond Inc. (BBBY) shares lost a quarter of their value, dropping to a three-decade low, after the company said it's got "substantial doubt" about whether it can remain solvent and may file for bankruptcy.

Key Takeaways

  • Bed Bath & Beyond said it may file for bankruptcy, sending shares falling by nearly a quarter.
  • The retailer said financial troubles are due to inventory constraints and lower customer traffic, among other issues.
  • Bed Bath & Beyond expects a wider loss and a more than 30% decline in sales for the most recent quarter.
  • Holiday shopping, typically a boon for retailers, was tepid this year amid inflation concerns.

The household goods retailer said recurring losses and negative cash flow from operations over the past three quarters led it to question its "ability to continue as a going concern." Besides the possibility of seeking bankruptcy relief, the firm is considering restructuring or refinancing debt, seeking additional capital, selling assets, and similar measures.

Bed Bath & Beyond also disclosed that it expects to post a widening net loss of $386 million for the most recent quarter on sales of $1.26 billion, down by a third year-over-year (YOY). The company said reduced credit limits had limited the amount of inventory in its stores and lower customer traffic hurt its ancial performance.

6-month price chart of BBBY

YCharts

Retailers like Bed Bath & Beyond have reported tepid sales figures as accelerating inflation weakened consumer demand over the past year. Retail sales fell in November, traditionally a strong month for retail during the holiday gift-giving season.

Supply chain issues have also led to inventory imbalances for many stores. Bed Bath & Beyond said it was forced to lower levels of in-stock presentation in recent months, although it has worked to remedy that with additional liquidity gained from end-of-year shopping.

Article Sources
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  1. Yahoo! Finance. "Bed Bath & Beyond Inc. (BBBY)."

  2. Bed Bath & Beyond Inc. "Bed Bath & Beyond Inc. Provides Business Update."

  3. MarketWatch. "Bed Bath stock plunges after warning that it may need to declare bankruptcy."

  4. New York Times. "Retail Sales Fell in November, Despite Black Friday."

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