Bed Bath & Beyond Reiterates Bankruptcy Warning After Loan Default

Bed Bath & Beyond said Thursday (Jan. 26) that it defaulted on a loan and has doubts about its resilience as an ongoing concern.

The home goods retailer said in a filing with the Securities and Exchange Commission (SEC) that the default was triggered Jan. 13 and Wednesday (Jan. 25).

“At this time, the company does not have sufficient resources to repay the amounts under the credit facilities and this will lead the company to consider all strategic alternatives, including restructuring its debt under the U.S. Bankruptcy Code,” Bed Bath & Beyond said in the filing.

The company added that in an effort to improve its financial position, it is cutting costs, lowering capital expenditures, and reducing its numbers of stores and distribution centers.

It’s also seeking reductions in rent from landlords, looking to raise additional capital, reducing or delaying business activities, and selling assets, the company said in the filing.

“These measures may not be successful,” it added.

Bed Bath & Beyond said that its financial situation was worsened by it having lower-than-expected inventory to sell during the holiday season because of accelerated vendor terms and credit line constraints.

“Based on recurring losses from operations and negative cash flows from operations for the nine months ended November 26, 2022 as well as current cash and liquidity projections, the company has concluded that there is substantial doubt about the company’s ability to continue as a going concern for the next 12 months,” Bed Bath & Beyond said in the filing.

The company had told investors Jan. 5 that it was facing a potential bankruptcy filing. In a report released in advance of its quarterly earnings, it said its net sales fell from $1.8 billion to $1.2 billion year over year.

About a week later, on Jan. 10, Bed Bath & Beyond said its delayed third-quarter results for the three months ended Nov. 26 reflected wider losses and a dwindling cash crunch that some analysts have said could run out within two months.

Bed Bath & Beyond CEO Sue Gove said on a call with investors: “Multiple paths are being explored, and we are determining our next steps thoroughly, and in a timely manner.”