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As sales decline, Bed Bath & Beyond issues a bankruptcy warning

By 01/05/2023 5:51 PMNo CommentsBy YidInfo Staff

Bed Bath & Beyond, a struggling retailer of home products, issued a warning on Thursday that, as sales continue to decline and it battles to draw customers, it might be forced to file for bankruptcy.

The company, based in Union, New Jersey, stated that it is considering several options, including selling assets or reorganizing its business in bankruptcy court, although it admitted that even such efforts might not be effective.

Following the news, shares dropped a quarter of their value and reached their lowest level since November 1992, trading at $1.82.

The store stated in a statement that there is “considerable question” regarding the company’s capacity to function as a going concern.

The business made its assessment as its poor performance persisted throughout the holiday season.

The third quarter ended November 26, is expected to result in net sales of $1.26 billion for Bed Bath & Beyond.

That would represent a 32% decrease from a year ago. Additionally, it forecasts a net loss of around $385.8 million for the third quarter, a more significant loss than the $276.4 million seen in the same quarter last year.

Sue Gove, who was recently named as the company’s CEO and president, attributed the underwhelming results to inventory shortages and lowered credit limits.

In August, Bed Bath & Beyond said it would close locations and lay off staff to turn around its struggling company.

It reduced its personnel by 20% and shuttered roughly 150 of its namesake outlets.

According to their estimation, the corporation would save $250 million due to the changes.

Additionally, it stated in August that it had secured new financing worth more than $500 million.

The company, which has been experiencing persistent revenue declines, also declared in August that it would return to its original strategy of concentrating on national brands rather than promoting its retail names.

That went against a policy that its former CEO, Mark Tritton, fired in June 2017 after less than three years in charge, had adopted.

According to the statement, one-third of its retail brands, which had just recently begun to be introduced, will be eliminated.

The business owns the buy Baby and Harmon retail franchises and Bed Bath & Beyond.

Bed Bath & Beyond is “too far gone to be saved in its present form,” according to Neil Saunders, managing director of GlobalData Retail, who noted that the company could restructure under Chapter 11, but that would require it to develop a credible business plan, which would be difficult, especially in the current economic climate.

He wrote that the business “has been run into the ground and has become more irrelevant due to a record of mistakes,” he wrote. “Only really drastic measures will allow it to survive, and even then, it will only be a shell of what it once was.”

On Tuesday, the firm will announce its final third-quarter numbers.

 

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