Shares of Bed Bath & Beyond dropped by more than 15% Thursday morning following an announcement it plans to offer and sell up to $300 million in common stocks in its latest bid to stave off bankruptcy—as the hamstrung home goods retailer’s financial woes continue.
Bed Bath & Beyond’s shares fell by 15.73% to an all-time low of 68 cents Thursday morning, continuing a downward slide — its shares have now fallen by nearly 71% on the year.
The drop comes hours after the struggling retailer announced plans to sell up to $300 million in common stock through an “at-the-market” program with investment bank B. Riley.
In a statement, the company said proceeds from the program will be used “immediately” to reinvest in inventory and recreate a “realigned store footprint.”
The company warned in a Security and Exchange Commission filing it might need to file for bankruptcy protection if it does not receive proceeds from its program, in which case shareholders “will likely receive no recovery at all for the securities offered.”
Company President and CEO Sue Grove said in a statement the move will “enable us to create the necessary financial runway to begin restoring our iconic Bed Bath & Beyond,” saying the company has raised $360 million of equity capital since the start of last month (the company had completed a stock offering in February expected to raise more than $1 billion in equity).
The company announced in an SEC filing its shares have been subject to “extreme fluctuations,” and acknowledged its common stock will likely respond to news of its liquidity, as well as lingering effects of the Covid-19 pandemic, but said, “we believe that recent volatility and our current market prices reflect market and trading dynamics unrelated to our underlying business, or macro or industry fundamentals.”
40% to 50%. That’s how much the company expects its fourth-quarter comparable sales to fall since this time last year, with net sales totaling $1.2 billion.
The move comes just over a week after Bed Bath & Beyond cut 1,300 employees, including 572 from a New Jersey e-commerce facility and another 377 at its Union, New Jersey, headquarters, according to state financial filings. It was the latest in a series of large layoffs at the company, which had cut 20% of its workforce and closed 150 stores last August (the company has roughly 32,000 employees, according to Pitchbook).
Bed Bath & Beyond has avoided filing for bankruptcy, though its stocks have plummeted tremendously since its all-time high of $79.32 in December 2013, with the company announcing multiple rounds of mass layoffs and store closures since then. The company’s financial woes started before the onset of the Covid-19 pandemic, as customers increasingly turned away from brick-and-mortar retailers to one-stop online retailers. Co-founder Warren Eisenberg admitted the company was slow to adapt to e-commerce, telling the Wall Street Journal the company “missed the boat on the internet.” Its sales continued to decline throughout the pandemic, with sales dropping by 17% in 2020 and 15% in 2021, CNN reported.
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