It's an ill wind that blows no good and for Bed Bath and Beyond (BBBY) that wind is coming from the north.
The struggling home retailer has gone through a series of setbacks as it tries to stay afloat.
The Union, NJ-based company said on Feb. 7 that it would raise around $1 billion from a preferred stock sale as it looks to avoid an imminent Chapter 11 bankruptcy filing.
If the capital raising fails, Bed Bath & Beyond said, it will "likely file for bankruptcy protection," noting it had appointed turnaround expert Holly Etlin as interim CFO.
Wedbush analyst Seth Basham, who described the move as a “last gasp” effort by the retailer, said he believes that the equity in Bed Bath & Beyond will be worthless later on, as equity holders typically receive no funds when a company files for bankruptcy.
Last month, Bed Bath and Beyond said it would begin closing Harmon, its discount beauty and personal care chain.
Bed Bath & Beyond was operating 50 Harmon, Harmon Face Value, and Face Value stores. Many of those stores were concentrated in the tristate area (New York, New Jersey, and Connecticut) and all of them will be shuttered.
Bed Bath & Beyond will close an additional 87 of its namesake stores, edging toward the 150 stores it said it would aim to shut down in 2022.
BBB Canada Sees 'Significant Losses'
And now comes word that the company's Canadian operations, Bed Bath & Beyond Canada, is going out of business, according to a filing with the Ontario Superior Court of Justice, which said "BBB Canada is insolvent."
"The Bed Bath & Beyond Group has been in financial difficulty for the past several years, suffering significant net losses since 2018," the filing said.
"The Bed Bath & Beyond Group’s situation significantly worsened throughout 2022, with declining year-over-year sales in both the United States and Canada, multiple credit rating downgrades, cash flow constraints, and significant inventory reductions," according to the filing, which was posted by Alvarez & Marsal Canada, a consultancy that has been appointed monitor for the proceedings.
Bed Bath & Beyond Canada operates 54 Bed Bath & Beyond stores and 11 BuyBuy Baby stores, with about 387 full-time employees and 1,038 part-time employees as of Jan. 31, according to court documents.
"Faced with extremely limited funding and significant constraints upon its use of cash, the Bed Bath & Beyond Group has reluctantly concluded that there is not enough capital available …to restructure both its business in the United States and properly resuscitate the Canadian business to achieve profitability," the filing said.
The Canadian operation "is not profitable on a standalone basis," the filing said.
"BBB Canada has realized significant net losses for the 9 months ending November 26, 2022," the filing said. "Moreover, BBB Canada contributes negative EBITDA margin to the Bed Bath & Beyond Group’s consolidated business."
The filing said that "it is vital that the wind down of the Canadian business take place in an orderly fashion in an order to minimize prejudice to stakeholders and maximize value."
