Bed Bath & Beyond Inc. (NASDAQ: BBBY) filed a form with the SEC on Thursday saying they would not be able to file their quarterly financial statements ending November 26, 2022, and are asking for a five-day extension to file.
“Based on business performance for the third quarter of fiscal 2022, the Company has determined the need for additional time to complete its quarter-end close procedures, including the evaluation of its results in conjunction with quarterly long-lived asset impairment testing,” the company said in a statement.
However, the firm still published preliminary results for the quarter, highlighted by an expected $1.26 billion in net sales compared to $1.88 billion a year ago. The company is also expected to print their 7th straight quarterly net loss, notching a bottomline loss of $385.8 million in this quarter compared to a net loss of $276.4 million in the year ago period.
As for the company’s cash position, as of last quarter they had $850 million of liquidity and used $325 million, suggesting that the company only has a little over two quarters left of cash.
“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 explained.
Given its recent financial performance and liquidity projections, Bed Bath & Beyond admitted that there is “substantial doubt” in their capacity to continue.
“Based on recurring losses and negative cash flow from operations for the nine months ended November 26, 2022, as well as current cash and liquidity projections, the Company has concluded that there is substantial doubt about the Company’s ability to continue as a going concern,” the firm said in the statement.
Until Thursday, the firm was asking bondholders to swap out their holdings for new debt to give more breathing room, but canceled the deal yesterday due to a lack of interest. This includes the termination of its previously announced exchange offers of 3.749% Senior Notes due 2024, 4.915% Senior Notes due 2034, and 5.165% Senior Notes due 2044.
While the firm promised to “continue to steer [its] business dynamically” and pursue steps to improve its financial position, the retailer has also already hinted on filing for bankruptcy.
“The Company continues to consider all strategic alternatives including restructuring or refinancing its debt, seeking additional debt or equity capital, reducing or delaying the Company’s business activities and strategic initiatives, or selling assets, other strategic transactions and/or other measures, including obtaining relief under the U.S. Bankruptcy Code,” the firm said.
Following the business update on Thursday, the firm’s shares fell 30% on the day, followed by a further 23% decline this morning. The company is currently trading at its lowest level in three decades, having not traded so low since October 1992.
The year 2022 had been a challenging one for the retailer, marked by a seemingly short-run short squeeze that ended with a 20-year old being US$110 million richer and Canadian investor Ryan Cohen cashing out his investment. The latter sent the firm’s rising share price back down by 44% after hours, back at where it started before the squeeze.
To address its ballooning debt, the company tapped law firm Kirkland & Ellis, the world’s largest law firm by revenue, which has gained popularity for its dominance in restructuring and bankruptcy situations.
Come September, the firm saw its CFO Gustavo Arnal jump off the 18th floor of a Manhattan office building. Upon his passing, Laura Crossen, then Senior VP of Finance and Chief Accounting Officer, took over.
While no one will ever know with certainty the reason for Arnal’s action, it may suggest a federal lawsuit filed in late August against him and Ryan Cohen, GameStop Corp.’s (NYSE: GME) chairman and a prominent investor in BBBY, could have some degree of credibility.
Bed Bath & Beyond last traded at $1.30 on the Nasdaq.
Information for this briefing was found via Edgar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
