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Bed Bath & Beyond, With 950 Stores Nationwide, Facing Bankruptcy

A former Bed Bath & Beyond store in Columbus, Ohio, that now sits vacant after it closed in late 2020.

Bed Bath & Beyond said in a filing with the Securities and Exchange Commission on Thursday that it has “substantial doubt” about its ability to continue as a going concern, considering losses and negative cash flow that the retailer suffered during most of 2022.

Bankruptcy is now an option, the company said, though it also noted that it is considering various other alternatives, including refinancing its debt or selling assets.

BBY faces bankruptcy at a time when a new wave of retail closures is expected, along with changing consumer habits in the face of persistent inflation that do not bode well for the health of already-struggling retailers.

Though store closures were relatively modest in 2022, the pace is expected to pick up this year, UBS analyst Jay Sole predicts, with department stores facing an especially rough year, while discounters will fare much better. So far, however, retailers have yet to announce many closures, with only 522 thus far planned for 2023, according to Coresight.

In a Notification of Late Filing with the SEC, Bed Bath & Beyond said that it isn't ready to release its full 10-Q form, which would detail its business performance for the quarter ended Nov. 26.

The company did say that it expects to report sales of about $1.26B for the quarter, down from about $1.88B during the same quarter in 2021, due to lower customer traffic and lower levels of available inventory. The company also expects a net loss of $385.8M for the quarter, up from a net loss of $276.4M during the same quarter in 2021.

As of mid-2022, the company had more than 950 stores, most of which are Bed Bath & Beyond locations, but around that time it announced that at least 150 stores would be closed in the near future, and about 20% of its workforce would be fired. The company also operates a number of buybuy Baby stores, and stores under the names Harmon, Harmon Face Values and Face Value.

Bed Bath & Beyond stock took a tumble on Thursday on word of the possible bankruptcy, down nearly 25% by midday. Compared with a year ago, its stock is down over 86%.

One reason for renewed stress on retailers in the new year will be stretched consumers. While a record 158 million Americans shopped on Super Saturday (Dec. 17 in 2022), a 17-year low national savings rate meant that more people were turning to credit cards to do so, Marcus & Millichap reports.

Higher consumer borrowing, paired with elevated interest rates, will probably raise U.S. households’ average credit card debt beyond the already high $8.9K mark set in September, which might act as a headwind for spending this year, according to Marcus & Millichap.