Bed Bath & Beyond Seeks Capital Injection, Buyer Before Probable Bankruptcy Filing

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Bed bath & beyond has been in talks with potential buyers and lenders as it works to keep its company afloat during a likely bankruptcy filing, according to people familiar with the matter.

The retailer is in the middle of a sales process in hopes of finding a buyer who will keep the doors open for both of its major chains, its eponymous banner and Buybuy Baby, the people said, not authorized to discuss the matter publicly.

At the same time, Bed Bath was also looking for a lender to provide financing that would keep the company afloat should it file for bankruptcy protection in the coming weeks, the people said.

A spokeswoman for Bed Bath said Wednesday that the company is not commenting on specific relationships, but has been working with strategic advisors to evaluate all avenues to regain market share and improve liquidity.

“Multiple paths are being explored and we are determining our next steps thoroughly and in a timely manner,” said the spokeswoman, who declined to comment further.

A representative for AlixPartners, who TBEN recently reported was hired as an advisor to the company, declined to comment.

Earlier this month, Bed Bath warned it may have to file for bankruptcy after plans for a turnaround failed to substantially boost sales and balance sheet recovery. The company reported net losses of more than $1.12 billion for the first nine months of the fiscal year. It has been blown through its liquidity in recent months, taking on a heavy debt load and dealing with strained relations with its suppliers.

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Comparable store sales fell 32% year over year in the most recent fiscal quarter, ending Nov. 26. Company executives said the company is having a harder time keeping shelves stocked as suppliers change payment terms or decide not to ship goods due to the retailer’s financial problems. challenges.

Last week, TBEN reported that Bed Bath had begun another round of layoffs in an effort to cut costs further. According to public documents, as of February 26, 2022, the company had approximately 32,000 employees.

The company has been working to find a route that will see its chains survive, the people added. A day before Bed Bath issued a “going concern” warning, it announced in an employee memo that it had hired Shawn Hummell, a former manager of Macy’s, to lead the eponymous brand’s retail, store operations and merchandising operations as senior vice president. president of stores. Prior to his time at Macy’s, Hummell worked for Abercrombie & Fitch, another retailer going through a turnaround.

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One potential buyer circling Bed Bath is private equity firm Sycamore Partners, according to those familiar with the talks. Sycamore is particularly interested in Buybuy Baby, Bed Bath’s banner for babies and toddlers, which has outperformed the wider company. Buybuy Baby is believed to have the best chance of surviving into the future, the people said.

Still, a sale of Bed Bath as a whole remains on the table — albeit with a much smaller retail footprint than is currently the case, the people said.

Sycamore is known for acquiring retailers such as women’s clothing chain Talbots, including distressed companies that have drawn attention to bankruptcy, such as Ascena’s Ann Taylor. A Sycamore Partners spokesperson declined to comment. Dealbook previously reported Sycamore’s interest in Buybuy Baby.

Bed Bath has also sparked interest from companies acquiring the intellectual property or brands of companies, particularly those in need, the people said. Authentic Brands, which has gone through many bankruptcies for retailers like Forever 21, has also looked into Bed Bath, the people said. An Authentic Brands representative did not immediately respond to comment.

Aside from a sale, the company and its advisers have been seeking additional funding for a bankruptcy filing, which could take place in the coming weeks, the people said. The company’s advisers are seeking a loan of at least $100 million, one of the people said.

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Last year, Bed Bath received $375 million in new funding from lender Sixth Street Partners, which has provided funding to other retailers such as JC Penney and Designer Brands.

The Sixth Street facility could be turned into bankruptcy financing, the people said, or the lender or others could turn their debt into equity and become Bed Bath’s owner. A Sixth Street representative did not immediately respond to comment.

Bed Bath’s financing strategy comes as a peer retailer Party town sought Chapter 11 protection this week. Also heavily indebted, Party City wants to restructure its balance sheet and continue with a smaller footprint.

Bankruptcy attorney Eric Snyder of law firm Wilk Auslander said a sale was unrealistic for Bed Bath due to declining sales and inventory, as well as increased losses.

“They don’t have the availability to right the ship and they don’t have the money to keep operating,” Snyder said. “I just don’t see any option other than bankruptcy and liquidation.”

-CNBCs Melissa Reco contributed to this report.