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Bed Bath & Beyond warned that it may soon have to file for bankruptcy while unsuccessfully struggling to attract more buyers.
“There is substantial doubt about the ability of the company to continue as a going concernthe retailer said in a statement.
The home goods retailer said it is looking at various options, including selling assets or restructuring its business in bankruptcy court. But it is recognized that even those efforts may not be successful.
The company’s recently appointed CEO and chairperson, Sue Gove, attributed the poor performance tothe inventory restrictions and reduced credit limits that resulted in a shortage of merchandise on store shelves.
Neil Saunders, managing director of GlobalData Retail, wrote in a report on Thursday that Bed Bath & Beyond is “too far to be saved in its current form”.
He noted that the company could restructure under Chapter 11, but would still need to come up with a credible plan to reinvent the business, and that will be challenging, particularly in a weakened economic environment.
“A catalog of missteps has sunk the company and has made her increasingly irrelevant”, wrote. “Only very radical action will allow him to survive and even if he does, he will be a shadow of his former self.”
A wave of losses
Its shares fell 30% and closed Thursday at $1.69, its lowest level since November 1992. The company’s assessment came as its dismal performance continued through the holiday season.
Bed Bath & Beyond said it expects to report net sales of $1.26 billion for the third quarter ending November 26. That would be a 32% drop from the previous year.
It also anticipates ua net loss of approximately $385.8 million for the third quarter, greater than its loss of $276.4 million in the prior-year period.
In August, Bed Bath & Beyond announced it was closing stores and laying off workers in a bid to improve its business. It closed around 150 of its stores and cut its workforce by 20%.
He estimated those cuts would save $250 million in the company’s current fiscal year.
With a prolonged decline in sales, the company also announced in August that it would return to its original strategy of focus on national brandsinstead of pushing their own store labels.
In addition to Bed Bath & Beyond, the company also runs the Buybuy Baby and Harmon chains.
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