Bed Bath & Beyond Inc announced on March 8 that it had raised another $135 million in an equity offering and was in the process of rebuilding its business after teetering on the brink of bankruptcy. The retailer has so far raised $360 million out of the roughly $1 billion that it planned in a complex deal of preferred stock and warrant offerings.

“Over the past month, we have been rebuilding our financial and operational positioning to execute our customer-focused turnaround plans,” chief executive Sue Gove said in a statement. The retailer has engaged with suppliers to improve inventory levels, closed stores to better align with customer demand and paid off outstanding interest payments, Gove said.

Bed Bath & Beyond shot to popularity in the 1990s as a go-to shopping destination for couples making wedding registries and planning for new babies, but demand has wilted in recent years as its merchandising strategy to sell more store-branded products failed. In January, the company raised doubts about its ability to continue as a going concern, just months after it announced job cuts and 150 store closures.

After narrowly avoiding bankruptcy, Bed Bath & Beyond’s financial position remains precarious, S&P said. A CCC- rating from S&P indicates that a company is “currently vulnerable and dependent on favourable business, financial and economic conditions to meet financial commitments.” 

“We believe [Bed Bath & Beyond’s] turn-around prospects remain very weak,” S&P analysts said. “In our view, BBBY’s customer value proposition has eroded significantly due to poor merchandising decisions, deficient omnichannel capabilities, and a lack of available inventory in key product categories.”

S&P also said Bed Bath & Beyond does not have a strong track record of successfully implementing strategic initiatives. As a result, “we believe reversing years of market share losses amid a highly competitive environment featuring better-capitalized and equipped competitors will be very difficult.” To turn itself around, S&P said Bed Bath & Beyond needs to improve its merchandise offering. And to do that, the retailer must mend its relationships with vendors. 

Source: Globe and Mail
Source: Reuters
Source: Retail Drive