In a statement released Thursday, Bed Bath & Beyond said that it is considering bankruptcy among other means to stay in business after a sales slump in the third quarter. While the location in the Valencia Marketplace on The Old Road was not on the list of store closures that was released in September 2022, the company recently sent out “Valencia Store Closing Sale” emails to its customers. The full statement below:
Bed Bath & Beyond Inc. provided Thursday a business update and certain preliminary, unaudited estimated financial results for the three months ended Nov. 26, 2022.
For the third quarter of fiscal 2022 (ended Nov.26, 2022), the Company expects to report Net Sales of approximately $1.259 billion compared to $1.878 billion in the year ago period, reflecting lower customer traffic and reduced levels of inventory availability, among other factors. SG&A Expense is expected to be approximately $583.6 million compared to approximately $698.0 million in the year ago period, driven by the execution of cost optimization initiatives to right-size the Company’s expense structure. The Company anticipates a Net Loss of approximately $385.8 million for the third quarter of fiscal 2022, including impairment charges of approximately $100.0 million, compared to a Net Loss of $276.4 million in the year ago period. These results, including any impairment charges, are subject to further review and potential adjustment.
Sue Gove, president & CEO of Bed Bath & Beyond said, “We have a clear vision for the future of the company. Today’s announcement underscores the importance of having initiated a turnaround at the start of the third quarter and why we strengthened our leadership team to execute each step with precision. Our plan has two anchors: the first enables us to refocus merchandising and inventory, operate more efficiently, and grow our digital and omni-capabilities, and the second focuses on strengthening our financial position. Transforming an organization of our size and scale requires time, and we anticipate that each coming quarter will build on our progress.”
Ms. Gove continued, “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. Reduced credit limits resulted in lower levels of in-stock presentation within the assortments that our customers expect. Consequently, we have already leveraged the liquidity gained from the holiday season to immediately pursue higher in-stock levels with support from our key vendors. We have seen trends improve when in-stock levels have increased.”
“Strengthening our ability to serve our customers will continue to drive our decision-making. We are resetting foundational elements to create a stronger and more nimble infrastructure that aligns closely with customer demand and preference. We continue to manage our financial position amidst a changing landscape and work with expert advisors as we consider all paths and strategic alternatives to accomplish our short- and long-term goals. We look forward to providing an update on these fronts on our formal third quarter earnings call next week.”
Ms. Gove concluded, “As always, our employees and partners are our top priorities. Our unwavering engagement with our supplier community will continue as we work together to realize our full potential. We are a team focused on the future and I am grateful for the dedication and hard work of those who are powering our path forward. We will continue to steer our business dynamically to ensure Bed Bath & Beyond, buybuy BABY and Harmon remain destinations of choice for customers well into the future.”
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. Accordingly, the Company has filed a Notification of Late Filing with the Securities and Exchange Commission (the “SEC”) with respect to its Quarterly Report on Form 10-Q.
In addition, the Company previously commenced an exchange offer and consent solicitation with respect to its unsecured senior notes, which expired on Jan. 4, 2023. While certain holders decided to tender their unsecured notes in the exchange offer and deliver consent in the consent solicitation, the conditions to the exchange offer and consent solicitation have not been satisfied and the exchange offer and consent solicitation were therefore terminated.
While the Company continues to pursue actions and steps to improve its cash position and mitigate any potential liquidity shortfall, 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 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. These measures may not be successful.
About the Company
Bed Bath & Beyond Inc. and subsidiaries (the “Company”) is an omnichannel retailer that makes it easy for our customers to feel at home. The Company sells a wide assortment of merchandise in the Home, Baby, Beauty and Wellness markets. Additionally, the Company is a partner in a joint venture which operates retail stores in Mexico under the name Bed Bath & Beyond.