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Bed Bath & Beyond ( BBBY ) filed for Chapter 11 bankruptcy protection on Sunday after years of declining sales decimated the furniture retailer.
In a statement on Sunday, the company said Bed Bath & Beyond and Buy BABY stores will remain open “as the company begins its efforts to close retail locations.” Sixth Street will provide the company with $240 million in debt financing, which will allow the company to continue operating during the wind-down process.
“Our teams have worked with incredible intent to support and strengthen our beloved banners, Bed Bath & Beyond and Shop BABY,” CEO Sue Gove said in a statement. “We are deeply grateful to our partners, customers, partners and the communities we serve, and remain committed to serving them throughout this process, continuing to work diligently to benefit all stakeholders.”
Bed Bath & Beyond had been exploring “strategic options” for the business since January. That plan fell apart when Bed Bath & Beyond’s first funding partner bailed out less than two months later.
In the most recent quarter, Bed Bath & Beyond reported a 33% drop in sales, with an adjusted loss of $225 million.
The company’s shares have lost 98% in the past year; The stock is down 88 percent year-to-date through Friday.
In the year After peaking at $12.3 billion in 2017, sales at the retailer have fallen in recent years, totaling just $7.9 billion in 2021, the lowest annual revenue since 2009. Corresponding levels reported in the mid-2000s.
While private labels have become an increasing part of the growth story for Target ( TGT ), Macy’s ( M ), Walmart ( WMT ) and other big retailers, Bed Bath & Beyond has lagged behind. The company’s decline was accelerated by the pandemic as consumers turned to online retailers like Amazon ( AMZN ) and WayFire ( W ).
From bath towels and hand soap to air fryers and board games, Bed Bath & Beyond was once a place where suburban families and incoming college students filled their homes.
But in recent years, Bed Bath & Beyond stores have become better known for discounts and empty shelves.
After a cumulative loss of $1.4 billion from 2018-2021, the company lost more than $1 billion in the first three quarters of 2022.
Last month, the company announced plans to hold a shareholder vote on the proposed stock split on May 9. The company stated in an SEC filing that raising its stock price is its last hope of survival.
“Our failure to obtain stockholder approval for the Reverse Split Proposal will force us to file for bankruptcy,” the company said in an SEC filing.
Bed Bath & Beyond announced a financing deal with Hudson’s Bay Capital on February 7 to raise more than $1 billion over the next year. But the provisions in that agreement required Bed Bath and above to keep the share price above certain levels.
The stock fell from more than $5 a share in February to less than $1 a share in late March, after Hudson’s Bay’s financing deal ended.
The money from Hudson’s Bay, as well as Bed Bath & Beyond’s new financing partner, B. Riley Securities, was intended to restock shelves, bring back vendors and revive sales at stores that are still operating.
“Having inventory and having the right inventory helps them,” Goldman Sachs analyst Kate McShane said on April 6 after Bed Bath & Beyond’s latest funding round.
“I think the question is, like in this environment, where you have a consumer who cares a little bit about what they’re spending, what’s that going to do for someone like Bed Bath & Beyond?”
The end of meme madness
Bed Bath & Beyond stock closed at $0.29 before the company filed for bankruptcy, down about $80 from the company’s all-time high in December 2013.
In recent years, however, the stock has not always been an accurate indicator of the retailer’s financial health.
In the year As interest in meme stocks sent shares of GameStop, AMC and others down in early 2021, Bed Bath and Beyond found itself in the mix. In the year Investor Ryan Cohen, who fueled the market’s interest in GameStop in late 2020, took a 9.8% stake in Bed Bath & Beyond in March 2022, and the company’s shares soared.
The idea of retail investor demand has become part of Bed Bath and Beyond’s revival strategy.
The company wrote in an April 5 SEC filing that the reverse stock split will help make the stock “more attractive” to investors.
Shares closed as high as $23 in mid-August 2022. Cohen sold his entire stake in the company that same month.
Josh is a Yahoo Finance reporter.
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