Bed Bath & Beyond could file for bankruptcy due to low sales caused by a shortage of products on its shelves, the AP agency reported.
The news sent its shares tumbling 30%, closing at $1.69, a level not seen since November 1992.
According to the information, the Union, New Jersey-based home goods retailer said that “there are substantial questions about the company’s ability to continue as a going concern,” and it is looking at various options, including selling assets or filing for bankruptcy, while acknowledging that his efforts might not be successful in overcoming the difficult situation he is facing.
Sue Gove, the company’s chief executive, said inventory restrictions and reduced credit limits resulted in a shortage of merchandise on store shelves.
Bed Bath & Beyond said it expects net sales of $1.26 billion for the third quarter ended Nov. 26, a 32% drop from a year earlier. In addition, it anticipates a net loss of approximately $385.8 million for the same period, higher than the $276.4 million it lost in the prior-year quarter.
The chain has been making efforts to correct its course since August, when it announced it was closing stores and laying off a portion of its workforce in an attempt to improve its numbers.
It has since closed 150 stores and laid off 20% of its workforce, estimating savings of $250 million in the current fiscal year. In another move to correct the long-term slump in sales, Bed Bath & Beyond said it would refocus on working with national brands, rather than pushing its own store labels.
“A catalog of missteps has sunk the company and made it increasingly irrelevant,” said Neil Saunders, managing director of GlobalData Retail. “Only very radical action will allow it to survive and even if it does, it will be a shadow of its former self.”
Saunders said the company could restructure under Chapter 11, but a credible plan to reinvent the business was still needed, which he called a challenge given the weak economic environment it faces.
Among Bed Bath & Beyond’s challenges are sourcing enough merchandise to fill its shelves and attract more customers to its stores and website, but according to reports, the retailer would not have cash to cover expenses such as leases. or payments to suppliers in the coming months.
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