Two days after replacing its CEO amid plummeting sales, Bed Bath & Beyond is seeking a buyer for its Buybuy Baby business.
As the Wall Street Journal reported Friday (July 1), the company had around $100 million in cash at the end of May after spending $300 million in reserve funds and borrowing $200 million from its credit line. It has also sold real estate to raise more money. The report said the company had $1 billion in cash reserves a year ago.
“The company appears to be in a bit of a free fall operationally,” David Silverman, a senior director at Fitch Ratings, told the Journal. “The liquidity concerns are quite real and will likely get worse over the next quarter or two.”
See also: Bed Bath & Beyond Ousts CEO After Sales Plummet
PYMNTS reported Wednesday (June 29) that Bed Bath & Beyond had replaced chief executive Mark Tritton with Sue Gove, an independent director on the company’s board and chair of its strategy committee. She will serve as interim CEO while the retailer searches for a permanent replacement for the post.
Fritton was ousted in the wake of an earnings report that showed a 27% decline in comparable sales for fiscal 2022’s first quarter, a trend the company said was due to a “rapid” shift in consumer spending and a decline in demand in the home sector.
Gove said this week that the company was also dealing with “steep inflation and fluctuations in purchasing patterns, leading to significant dislocation in our sales and inventory that we will be working to actively resolve.
“The simple reality though is that our first quarter’s results are not up to our expectations, nor are they reflective of the company’s true potential,” she said.
Related: RH Says High Mortgage Rates Killing Demand for Luxury Homes, Furniture
This week saw another home furnishings retailer, RH, report a drop in sales fueled by the trend of rising mortgage rates keeping buyers away from luxury homes and the furniture that goes with them.
“With mortgage rates double last year’s levels, luxury home sales down 18% in the first quarter, and the Federal Reserve’s forecast for another 175 basis point increase to the Fed Funds Rate by year end, our expectation is that demand will continue to slow throughout the year,” RH President and CEO Gary Friedman said, adding that he expects “the next several quarters” will be difficult.
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