Bed Bath & Beyond shares plunge 25% as retailer files for bankruptcy

  • The company wins approval for a $40 million bankruptcy loan
  • Bed Bath to seek buyers for assets such as baby stores
  • Stocks, notes fall

LONDON, April 24 (Reuters) – Shares in Bed Bath & Beyond Inc ( BBBY.O ) plunged around 25% on Monday after the home goods retailer’s long battle to save the business ended in bankruptcy.

The once high-flying company filed for bankruptcy protection on Sunday, saying it had launched a liquidation sale after failing to secure funds to stay afloat.

Bed Bath & Beyond also plans to use the Chapter 11 process to seek outside buyers to keep the business going or buy discrete assets such as the company’s 125 baby stores operated under the buybuy Baby brand.

On Monday, the company received a US bankruptcy judge’s permission to borrow $40 million to stabilize operations and buy time for an orderly sale process.

A flawed sales strategy, lower spending by inflation-stricken Americans and stiff competition from rivals such as TJX’s TJ Maxx ( TJX.N ) and Target Corp ( TGT.N ) drove the business under as losses mounted and it ran out of cash.

Signage is seen at a Bed Bath & Beyond store in Manhattan, New York City, U.S., June 29, 2022. REUTERS/Andrew Kelly

“It was deteriorating before COVID, COVID pushed it over the edge. It was mismanaged during COVID, using the remaining cash to buy back stock as opposed to keeping a respectable inventory in the store that would attract customers,” Thomas Hayes said , chairman and managing member at Great Hill Capital.

But Bed Bath’s fall is not seen as a sign of weakness in the wider retail sector. Analysts said some companies, including Walmart Inc ( WMT.N ), Inc ( AMZN.O ), Target and Williams-Sonoma Inc ( WSM.N ), stand to gain share and a marginal benefit to earnings.

On Monday, Bed Bath & Beyond was the second most active stock on Stocktwits, a website popular with individual investors.

The notes due 2024 remained under pressure, falling around $3 on Monday and pushing the yield to a record high of more than 450%.

US shares in the company pared some pre-market losses to trade at 21 cents.

Bed Bath also named interim CFO Holly Etlin as its new CFO. Etlin is a bankruptcy expert, and will also oversee the liquidation and sale processes.

Reporting by Joice Alves; Editing by Amanda Cooper

Our standards: Thomson Reuters Trust Principles.

Bansari Mayur Kamdar

Thomson Reuters

Bansari reports on the global financial markets and writes Reuters’ daily flagship market reports on stocks, bonds and currencies. A trained economist and winner of the Arthur MacEwan Award for Excellence in Political Economy, she has written for renowned global newspapers and magazines, including The Diplomat, Boston Globe, Conversation, Huffington Post and more.

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