- Home goods retailer Bed Bath & Beyond — still scrambling to find financial lifelines and avoid bankruptcy — announced Thursday that it has filed to sell up to $300 million in common shares in an “at the market” offering and entered into a common stock purchase agreement and registration rights agreement with B. Riley Principal Capital II to obtain additional capital for the company.
At the same time, the Union, N.J.-based retailer said it is terminating its previous public equity offering and all outstanding warrants for Series A convertible preferred stock associated with it.
“The actions we’ve taken have enabled us to create the necessary financial runway to begin restoring our iconic Bed Bath & Beyond and buybuy BABY businesses,” Sue Gove, the company’s president and CEO, stated in the release. The company also reported preliminary results showing a year-over-year comparable sales decline for the fiscal fourth quarter ended Feb. 25 in the 40%-50% range.
The retailer has been teetering on the brink of bankruptcy, warning in January that there was “substantial doubt about the company’s ability to continue as a going concern” as it has continued to seek liquidity.
In the wake of the company’s latest capital raise news, Morningstar analysts led by Jaime Katz, a senior equity analyst at Morningstar, wrote Thursday that they still don’t plan to alter their $0 per share value estimate of the company and still expect that it will eventually declare bankruptcy.
“While we think the firm has been successful in raising capital in creative ways, we don’t view any of the undertaken efforts as value accretive or effective at changing the underlying fundamentals of the business,” Katz wrote. “In fact, given the ailing housing market (existing home unit sales fell 23% in February), it appears the downward spiral of demand has accelerated at Bed Bath.”
Bed Bath & Beyond’s struggles have played out over several years. Prior to the pandemic, the company was in a weak financial position as it was losing traction with its customer base and struggling with an omnichannel platform, according to Industry Dive’s sister publication Retail Dive.
The company also failed to build on the headwind it and many other retailers got early in the pandemic from home-bound customers eager to buy products to spruce up their houses and apartments. Then too, a bid to launch owned brands faltered, Katz previously told CFO Dive. Instead, management’s efforts to turn the company around have persisted, marked by store closures and layoffs.
In addition to the financial turmoil, the company’s C-suite has also grappled with succession issues. In February, Bed Bath named Holly Etlin as its interim chief financial officer, replacing Laura Crossen, who was swiftly named to the role in the wake of the death of then CFO Gustavo Arnal in September. Etlin has 30 years of turnaround experience, including serving as the chief restructuring officer at Tailored Brands and as partner and managing director at AlixPartners.
Bed Bath & Beyond’s shares plummeted 26.23% Thursday to close at $0.59.