Bed Bath & Beyond plans to sell $300 million in stock, warns again of bankruptcy

The struggling retailer, Bed Bath & Beyond Inc, has announced plans to sell $300 million worth of its shares as it looks to raise more capital to stay in business. The company has warned for the second time that it may have to file for bankruptcy if it fails to raise the needed funds. After the announcement, shares in the company fell as much as 19% to a record low of 65 cents.

The company had initiated a public equity offering of preferred stock and warrants, intending to raise $1 billion to avoid bankruptcy. However, it has faced difficulty in securing investors due to its stock price continuing to trade below $1. The company said it has raised $360 million through its previous offering, which was terminated.

The retailer plans to use the new funds to invest in merchandise inventory, increase store footprint, and realign the cost structure over fiscal year 2023. The company also expects its operating losses to continue, and its fourth-quarter net sales to be around $1.2 billion against the analysts’ estimate of $1.43 billion.

The company is also cautioning investors that it expects its fourth-quarter comparable sales to decline between 40% to 50%, compared with the analysts’ estimate of a 26.3% drop, according to Refinitiv data.

Bed Bath & Beyond has amended a credit agreement, lowering two revolving loan amounts, one from $565 million to $300 million and the other from $225 million to $175 million. In the meantime, it risks losing additional funding from key investor Hudson Bay Capital Management.

The company has reached an agreement with B Riley to sell the $300 million worth of shares.

Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Krishna Chandra Eluri and Pooja Desai

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