There are two Bed Bath & Beyonds these days: One is the corporation desperately maneuvering through the financial world trying to get new funding and stay out of bankruptcy. The other is the retailer working to fix its merchandising strategy…also desperately.
At the end of this week, both are near total collapse.
With the end of its clever financing deal to sell stock to an investor, Hudson Bay Capital, and its latest admission that sales continue to plummet in its business – as much as 50% this past quarter – the beleaguered retailer appears to be on the brink of bankruptcy…once again.
On Friday morning its stock had sunk below the 50 cent mark – 45 cents at mid-day — and its total market cap was barely $53 million. Just on Friday, the share price was down nearly 23% while as recently as two weeks ago it – and total company value — was double, to say nothing of a few years ago when the company was worth billions of dollars and its stock was still a Wall Street darling.
Predictions of Bed Bath’s descent into bankruptcy have been rampant for much of the past year and each time the company has managed to stay its execution through financial manipulations that even those in the money business say are virtually unprecedented. Now it seems there are no more rabbits in its proverbial hat.
The company continues to try a vast array of financial fixes to stay out of bankruptcy. This week, even as its Hudson Bay deal collapsed, it said it would try to sell another $300 million worth of stock. Exactly who would buy that and how much they would pay was left unsaid. And doing the math, at 45 cents a share that would involve issuing more than half a billion new shares, a seemingly impossible task given the current float.
In the meantime, it has lost the head of its flagship brand who left earlier this week, succeeded on an interim basis by a former board member with a long retail pedigree, but one who was put on that board by the very investors who started the process that has led to the current debacle.
It said it would pay out $500 retention bonuses to store workers who stuck around, admitting that the sinking-ship cliché is in fact the sad truth.
And it gave a preliminary heads-up on its fourth quarter numbers, saying it expected comp store sales to be barely half of what they were a year ago…to say nothing of the level of two years ago, which could turn out to be as much as four times greater.
BBB management continues to put on a brave face and say it is fighting the good fight. If nothing else, its financial creativity is remarkable for any public corporation as it throws everything including the proverbial kitchen sink at its efforts to stave off bankruptcy. As the week ends, its appears it will not be enough…even as it has appeared that way so many times in the recent past.
But what lies Beyond is now becoming an increasingly certain fate.
WarrensReport 