Jason Ryan, Staff
Bed Bath & Beyond said Thursday it does not have enough cash to pay down its debts and it has defaulted on its credit line with JPMorgan, warning once again of a potential bankruptcy. Shares of Bed Bath plunged Thursday afternoon, prompting brief trading halts. The stock closed 22% down with a market cap of about $295 million, although it traded slightly higher Friday morning.
In a securities filing, Bed Bath & Beyond said it “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 is attempting to cut costs by lowering capital expenditures, closing stores, and negotiating lease deals with its landlords but personally warned “these measures may not be successful”.
Bed Bath’s debt load also includes $1.2 billion in unsecured notes, which have maturity dates spread across 2024, 2034 and 2044, and have been trading at extremely distressed levels. The company said previously it was not able to refinance portions of that debt less than a month after it told investors it planned to take out more credit to pay down its obligations. The company has been burning through cash in recent quarters. It used $890 million in cash during the nine months ended Nov. 26, the company reported Thursday. As of that date, Bed Bath said it had $225.7 million remaining in cash.
As of late November, the company had 949 stores, including 762 Bed Bath & Beyond stores, 137 buybuy Baby stores and 50 stores under the names Harmon, Harmon Face Values or Face Values. In September, the company announced only 56 Bed Bath & Beyond stores would be closing; however, earlier this month, the company posted a list with 62 Bed Bath closures, six buybuy Baby and two Harmon stores. The original closings announced in September were also on the list.
This news comes only a few months after the CFO of Bed Bath & Beyond leapt to his death from a Manhattan skyscraper where he had faced pump and dump allegations less that two weeks earlier.
All and all, 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. The company will likely end in liquidation if it does not find a buyer soon.