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Once a Hot Meme Stock, Bed Bath & Beyond Is on the Verge of Bankruptcy

Published 06/01/2023, 17:48
Updated 07/04/2022, 09:55

Shares of Bed Bath & Beyond (NASDAQ:BBBY) are down more than 12% in the market pre-open after the retailer warned of potential bankruptcy. The company also said it is bracing for a notable Q3 loss and added it could skip its debt payments due next month.

Bed Bath Exploring Different Options to Keep Afloat

Domestic merchandise retailer Bed Bath & Beyond is preparing to file for bankruptcy protection in the following weeks, according to Reuters, citing people familiar with the matter. The company’s shares are down more than 12% in premarket trading Friday. The move comes after the company struggled to drive sales and warned of a significant Q3 loss, telling investors it may not be able to ride out the storm.

Bed Bath & Beyond said it could skip debt payments due Feb. 1, Reuters reported, just a month after notifying investors it intended to borrow more capital to settle its obligations. The company has almost $1.2 billion in unsecured notes with different maturity dates across 2024, 2034, and 2044.

The warning of a potential bankruptcy comes as the retailer claims it will likely not have enough money to cover expenses, including lease agreements or supplier costs. Apart from bankruptcy protection, the company said it is exploring other options such as restructuring, raising fresh capital, and selling some of its assets.

Bed Bath & Beyond’s CEO Sue Gove said the company will continue trying to rebuild its business and ensure its flagship brands “remain destinations of choice for customers well into the future.” In addition to a hefty debt load and poor sales, Bed Bath said it is also struggling to secure enough merchandise to fill its shelves and is attracting fewer customers to its physical and online stores.

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“Despite more productive merchandise plans and improved execution, our financial performance was negatively impacted by inventory constraints as we partnered with our suppliers to navigate both micro- and macro-economic challenges.”

– CEO Sue Gove said.

Once a Popular Meme-Stock, BBBY Lost 90% of its Value in 1 Year

Bed Bath’s warnings mark the blow for the embattled retailer and a sharp U-turn from 2021 when the company saw its shares skyrocket alongside other meme-stocks such as GameStop (NYSE:GME) and AMC.

While meme stocks lost most of their gains last year, BBBY received another boost when GameStop chairman Ryan Cohen revealed a 9.8% stake in the retailer in March 2022. But the hype was short-lived as Cohen filed a form enabling him to sell his entire stake at the company just a few months later.

The meme stock ended the Thursday trading session down 30% at $1.69 per share. The company’s share value plunged nearly 90% in the past year.

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