Consignment Buying Latest ‘Relentless’ Move by Bed Bath & Beyond

It was their word, not from somebody else outside the company: “relentless.”

It’s how Bed Bath & Beyond described its latest – and yet another – initiative to stave off what increasingly looks like could be the troubled retailer’s inevitable bankruptcy filing.

Wednesday morning BBB announced a new revolving consignment buying plan with a subsidiary of Hilco, the giant real estate and investment company, that essentially finances up to $120 million in merchandise purchasing guaranteed by Hilco.

“We remain relentless in executing plans that can help us overcome near-term operational and financial challenges,” Sue Gove, president & CEO said in announcing the plan. “Our new vendor consignment program enables us to increase our inventory position in top items that customers are buying and improve the customer experience.  This capital-light solution can allow us to strengthen merchandise availability and better fulfill demand.”

It’s only the latest in what seems to be a never-ending series of clever, often unprecedented and, yes, desperate moves to keep the retailer afloat while it tries to turn itself around. Stock issuance plans, complex investment programs and pay-in-advance buying for selected vendors and products are just some of the things BBB has tried over the past several months, even as it continues to report disastrous sales forecasts and a banking account that is scraping the bottom of the sofa cushions.

This new third-party buying plan is one that has been seen before, including some involving Hilco. Vendors have said, in reports not necessarily corroborated by the retailers themselves, that companies like Christmas Tree Shops and Tuesday Morning have initiated similar buying plans. The advantage to vendors is that they are guaranteed to be paid by someone like Hilco that is very much financially secure rather than Bed Bath which is very much not. BBB ends up paying more for the goods after companies like Hilco take their cut but at least they are getting goods to put on their shelves.

Gove said in her statement that “We are doing what we must to sustain our business immediately and unlock our true value over the long-term – for all stakeholders.” She said it’s another step in BBB’s efforts in “fueling our determination for a successful turnaround.”

Published reports have said the company needs to have substantially more value by the time it files its 10-K report with the Securities and Exchange Commission on April 26. One source quoted in a Fortune magazine story says the company needs a public float of at least $700 million by that date to satisfy SEC requirements. The market cap of the company as of Wednesday morning was $128 million, up substantially from previous days when it hovered near $40 million, seemingly reflecting newly issued shares.

By mid-day on Wednesday the company’s shares were trading at about 32 cents each, its all-time low and more than a 50% drop in just the past five trading days.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s