Bed, Bath & Beyond loan of $375 million is temporary relief before the holiday season

Bed, Bath & Beyond loan of $375 million is temporary relief before the holiday season

A customer walks into a Bed Bath & Beyond store in Novi, Michigan, US, January 29, 2021. REUTERS/Emily Elconin

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NEW YORK, Aug 30 (Reuters) – As Bed Bath & Beyond Inc (BBBY.O) prepares to disclose Lifeline Financial — a roughly $375 million loan — investors are hoping Sue Goff, the retailer’s interim CEO, will also provide details about how it works. She plans to rebrand the chain and direct it to profitability when she speaks on Wednesday.

Known for providing many shoppers with 20% off coupons, Bed Bath & Beyond has overhauled its products in recent years to focus on private label or private label products, including Our Table-branded cookware. But the retailer’s strategy failed. Sales fell 25%, losing $358 million in the first quarter ended May 28.

On Wednesday, investors will need an update on how Bed, Bath & Beyond is managing surplus inventory and private label strategy. Bed Bath has canceled one of its new brands, Wild Sage, after customers discarded the products, according to Jane Hali & Associates analyst Jessica Ramírez. With inflation nearing 40-year highs, investors want “more clarity on pricing strategy going forward,” said David Klink, chief equity strategist at Huntington Private Bank. Klink added that using coupons to drive sales “is not a sustainable long-term strategy.”

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“More than anything,” Ramirez said, “the chain needs almost a complete rebrand that will appeal to the customer.”

Investors also hope that the retailer will disclose any progress it has made in finding a buyer for the buybuy Baby chain. Wedbush analysts estimate that the US baby gear seller, which owns more than 130 stores, could make between $630 million to $910 million. But analysts warned that while the sale would yield cash up front, it would remove a future revenue source.

Bed, Bath & Beyond’s biggest investor, Ryan Cohen, co-founder of online pet store Chewy Inc., sold his 9.8% stake earlier this month, sending shares crashing nearly 40% after a rally fueled by a rally.

Bed, Bath & Beyond said in late June that there was interest in the buybuy Baby chain from potential buyers, and Cohen encouraged the retailer to seek options for the chain earlier this year, according to a securities filing.

At Bed, Bath & Beyond, stocks rose 12.5% ​​during the quarter ended May 28. Between June 3 and August 22, at least 22 ships from Asia carrying 40 large containers of Christmas and Halloween merchandise arrived at US ports bound for Bed, Bath & along with stores and distribution centers, data from Ocean Audit, a recovery consultancy, shows. Money in sea freight.

The chain has closed nearly 200 stores over the past two years, and could try to close more to maintain cash, although it faces huge costs in doing so.

A source familiar with the matter said that roughly 25% of the remaining 900 Bed Bath & Beyond stores are likely unprofitable.

The source said Bed Bath & Beyond would be looking for more rent relief from landlords going forward.

Bed, Bath & Beyond was last week finalizing a $370 million loan deal with investment firm Sixth Street. The company said in mid-August that it was working with financial advisors and lenders to strengthen its balance sheet. Read more

In the quarter ended May 28, it exhausted $332 million in cash, leaving it with a reserve of $108 million, even after borrowing $200 million from a line of credit. A year ago, the company had $1 billion in cash reserves.

Shares of the chain, which have fallen over the past month but still managed to double in value, closed down 9.3% at $12.11 on Tuesday ahead of the retailer’s expected announcements on Wednesday. Read more

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(Reporting by Siddharth Caval, Ariana McLemore and Shibuike Ugo in New York; Reporting and Additional Writing by Jessica Dianapoli; Editing by Jonathan Otis

Our Standards: Thomson Reuters Trust Principles.

Ariana McLemore

Thomson Reuters

Arianna McLemore reports on the work of the law, including diversity in the profession, corporate practices, legal education, and attorney career cycles.

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