Bed, Bath & Beyond sinks on the stock market after warning of the risk of entering bankruptcy

The shares of the company Bed, Bath & Beyond collapse again this Thursday on the Stock Market after the company has publicly expressed doubts about its viability.

The distribution firm of home and decoration products has been plunged into a financial crisis due to the drop in sales and heavy losses and for now the adjustment plans have not yielded the results they wanted.

The company contemplates various possibilities, among which it cites that of declaring bankruptcy.

The price has come to fall more than 17% shortly after the opening of the session.

“Although the company continues to carry out actions and measures to improve its treasury position and mitigate any possible liquidity deficit, based on recurring losses and negative cash flow from operations during the nine months ended November 26, 2022, as well as current cash and liquidity projections, the company has concluded that there are substantial doubts about its ability to continue as a going concern.

The company continues to consider all strategic alternatives, including restructuring or refinancing its debt, seeking additional debt, a capital increase, asset sales, other strategic transactions and other steps, including filing for bankruptcy, it says.

Bed Bath & Beyond has been bordering on suspension of payments due to its financial problems, caused first by the pandemic and then by changes in consumption habits due to high inflation, to which were added strategy and execution errors by the company itself.

The news about changes in the shareholding and about advances and setbacks in the negotiations to refinance the debt caused violent fluctuations in the price of its titles last year, but the company has lost more than 80% of its value in the last year and is listed at minimums of the last three decades.

Its market capitalization is just over 200 million euros.

Last September, the company's crisis experienced a tragic chapter with the suicide of its financial director, Gustavo Arnal.

Arnal was the executive who was trying to solve the company's financial problems.

The warning about viability has come after the company has published a preview of quarterly results.

For the third quarter of fiscal year 2022 (ended on November 26), the company expects to register net sales of approximately 1,259 million dollars (1,192 million euros, at current exchange rates), with a decrease of 33% compared to the 1,878 million dollars from the same period of the previous year.

The company attributes this drop in sales to lower customer traffic and reduced levels of inventory availability, among other factors.

Bed, Bath & Beyond expects SG&A expenses to be approximately $583.6 million, compared to $698.0 million last year, due to the implementation of cost optimization initiatives to adjust the company's expense structure.

The company expects quarterly net losses of approximately 385.8 million, including impairment charges of approximately 100 million, compared to some red numbers of 276.4 million in the equivalent quarter of the previous year.

Despite everything, its president and CEO, Sue Gove, believes that the company has a future: “We have a clear vision of the future of the company.

Today's announcement underscores the importance of starting a turnaround early in the third quarter and why we strengthened our management team to execute each step with precision.

Our plan has two anchors: the first allows us to refocus merchandising and inventory, operate more efficiently, and grow our digital and omnichannel capabilities, and the second focuses on strengthening our financial position.

Transforming an organization of our size and scale takes time, and we anticipate that each next quarter will build on our progress,” she stated in the statement.