Bed Bath & Beyond Says It Has "Substantial Doubt" It Can Stay in Business
THE COMPANY HAS GRIM NEWS AMID MASS STORE CLOSURES.
We've lost a fair share of retail chains in the U.S. since the start of the COVID pandemic in 2020. Several once-popular retailers including Pier 1 Imports, Modell's Sporting Goods, Stein Mart, and Lord & Taylor have recently shuttered all their physical stores across the country. And most of those still around have struggled as well. Over the last few years, notable names in the industry like Walmart, CVS, and Macy's have steadily been closing select stores in various states. But now one popular retailer could be heading down the path of complete shutdown. Read on to find out why Bed Bath & Beyond says it has "substantial doubt" it can stay in business.
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Bed Bath & Beyond previously announced mass store closures.
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Various Bed Bath & Beyond stores across the U.S. have turned off their lights permanently in the last few months. But this wasn't without warning: In an Aug. 31 press release, Bed Bath & Beyond announced plans to shutter roughly 150 "lower-producing" locations.
"We are working swiftly and diligently to strengthen our liquidity and secure our path for the future," Bed Bath & Beyond CEO Sue Gove said. There were a total of 768 Bed Bath & Beyond stores located throughout North America at the time.
Now the company is revealing concerns about staying in business.
Retail Photographer / Shutterstock
The Bed Bath & Beyond closures might not be doing enough to provide the retailer with future security, however. In a new business update released on Jan. 5, the company revealed real concerns for its survival amid a worsening financial situation.
"The company has concluded that there is substantial doubt about the company's ability to continue as a going concern," Bed Bath & Beyond said in a statement.
Neil Saunders, managing director at the retail consulting firm GlobalData, told The New York Times that hope for Bed Bath & Beyond to stay in business is now dwindling. "Before Christmas, there was just a glimmer of hope," he said. "There was a view that, OK, it's going to be difficult, but maybe they were going to pull through. Things have just got worse."
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Bed Bath & Beyond is facing lower sales and higher losses.
With its business update, Bed Bath & Beyond revealed its preliminary earnings for the last quarter ending on Nov. 26. According to the company, sales have dropped to just around $1.3 billion from $1.8 billion the year prior, "reflecting lower customer traffic." And Bed Bath & Beyond's losses for the quarter are expected to be around $385 million, up significantly from its losses of roughly $276 million this same time last year.
As a result, Bed Bath & Beyond is reportedly preparing to file for bankruptcy in the upcoming weeks, according to The Wall Street Journal. The newspaper said "people with knowledge of the matter" have revealed that the retailer is in the early stages of planning for a chapter 11 bankruptcy filing.
As The New York Times explains, filing for bankruptcy could either help Bed Bath & Beyond get back on solid ground or force it to close altogether. "What we've seen many times is that it ends up being a stay of execution," Michael Baker, a retail analyst at D.A. Davidson, told the newspaper. "Sometimes that works, but oftentimes you see an announcement of scaling back and having fewer stores and then that's followed by a complete liquidation."
The company has indicated it's working on a turnaround.
When Best Life reached out to Bed Bath & Beyond about its potential for bankruptcy, a spokesperson for the company said it "does not comment on speculation of this nature" and indicated that the company is exploring options for its next steps. "We have been working with strategic advisors to evaluate all paths to regain market share and enhance liquidity, our stated priorities," they explained in an email statement.
Potential paths forward could include "restructuring or refinancing our debt, seeking additional debt or equity capital, reducing or delaying the company's business activities and strategic initiatives, or selling assets," the spokesperson said. However, "no determinations have been made as of this time," they added.
In the business update, Gove also indicated that the company is working on a potential turnaround. "We have a clear vision for the future of the company. Today's announcement underscores the importance of having initiated a turnaround at the start of the third quarter and why we strengthened our leadership team to execute each step with precision," the CEO said in a statement. "Our plan has two anchors: the first enables us to refocus merchandising and inventory, operate more efficiently, and grow our digital and omni-capabilities, and the second focuses on strengthening our financial position. Transforming an organization of our size and scale requires time, and we anticipate that each coming quarter will build on our progress."