Bed Bath & Beyond expresses “substantial doubt” about ability to continue operations

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Union, N.J. – Bed Bath & Beyond this morning revealed a number of factors that have led executives to conclude that it may not be able to go on without a pursuing alternate strategies.

In a filing with the SEC and a subsequent press release today, Bed Bath & Beyond pointed to recurring losses, negative cash flow from operations and current liquidity projections. “[T]he company has concluded that there is substantial doubt about the company’s ability to continue as a going concern,” it noted in both documents.

In the SEC filing, BBB stated that it is considering strategic alternatives including bankruptcy as well as restructuring or refinancing its debt, seeking additional debt or equity capital, reducing or delaying the company’s business activities and strategic initiatives, selling assets and other strategic transactions.

A combination of lower traffic and inventory outages drove sales down an estimated 33% to $1.259 billion in the third quarter ended Nov. 26, the company reported. Bed Bath & Beyond said it expects to report a net loss of around $385.8 million for the third quarter, including impairment charges of approximately $100.0 million, compared to a net loss of $276.4 million in the year-ago period.

The company is scheduled to report full Q3 results on Jan. 10.

President and CEO Sue Grove acknowledged that tight credit limits crimped BBB’s ability to fully stock up, but said the company is now leveraging its untapped liquidity from the holiday season “to pursue higher in-stock levels with support from our key vendors.”

She added; “We have seen trends improve when in-stock levels have increased.”

At the beginning of Q3, Bed Bath & Beyond initiated a new turnaround plan with two anchors, she said. The first involves merchandising and inventory, operating more efficiently and growing digital and omni-capabilities. The second focuses on strengthening its financial position.

“Transforming an organization of our size and scale requires time, and we anticipate that each coming quarter will build on our progress,” she said.

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