Bed bath & Beyond making last hope in an effort to survive bankruptcy.


Jason Ryan, Staff

In an effort to keep from declaring bankruptcy, Bed Bath & Beyond is asking shareholders to approve a reverse stock split at a forthcoming special meeting, according to a regulatory filing made late Wednesday.  

To ensure that there are enough shares available to raise up to the $300 million in equity from a stock offering announced last week, the retailer’s board is urging shareholders to accept the reverse stock split at the May 9 meeting as Bed Bath & Beyond deeply needs cash to survive, again. 

The company has seen problems with the business before the pandemic hit, and its business has been experiencing declining trends. Despite an increase in online retail sales, Bed Bath & Beyond still didn’t generate the same number of sales in past years as other shops like Target. Due to poor performance, Bed Bath & Beyond fired Mark Tritton, its recently appointed CEO and former Target chief of merchandising. 

The declining stock price of Bed Bath & Beyond, which has been trading below $1 for the past two weeks, has made fundraising attempts extremely difficult. Bed Bath’s stock was trading at about 30 cents early on Thursday, giving it a market worth of only about $132 million. According to the company’s statement, if the plan isn’t carried out, it probably will not have enough equity to pay its debts and maintain operations. Leaving them no option but to file for bankruptcy. 

That being said, the struggling store announced that the reverse stock split would occur at a ratio between one for ten and one for twenty, to be overall decided by the board. If the split is granted, there will be a considerable decrease in the number of shares of common stock that are outstanding, enabling the company to issue enough shares to satisfy the requirements of the offering. The firm anticipates that the reverse split will increase Bed Bath’s share price per share, which will enhance investor perception of the company’s stock.

The stock offering will eventually dilute Bed Bath’s share price, even if the reverse split temporarily raises it. This is what happened after the business announced another stock offering in February. Since January, the home goods business has been issuing bankruptcy warnings after a string of poor quarters left it barely hanging on to life. For instance, it announced a $120 million lifeline on Wednesday from liquidator Hilco Global so it may replenish its inventory in a desperate attempt to boost sales.

On paper, Bed Bath & Beyond’s plans to streamline operations and stock fewer items may have made sense, but in fact, they have displeased customers and investors. Since fewer products were available, the “Beyond” division of the company struggled because many devoted customers were used to buying at the retailer before heading to rivals Target or Home Goods. Customers used to have a wide variety of brand alternatives, therefore they were disappointed by the alterations made after the structural cleaning of its aisles.  Bed Bath & Beyond has been distressed for years, having failed to reinvent itself in the digital age despite efforts to declutter its stores and remake its coupon strategy. I believe the company’s idea to push for a reverse stock split proves the company is on its last leg. If not approved, the company will likely end up in liquidation if it cannot find a buyer.

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