BBBY Stock: Bed Bath & Beyond Sets New 52-Week Low
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Shares in Bed bath and beyond (NASDAQ:BBBY) shares plunged after his agreement to raise funds via Capital of Hudson’s Bay collapsed. The company said it would try to raise capital by selling $300 million of new stock instead.
Combined with a 7% drop overnight, the company was expected to open with a market cap below $65 million, a 52-week low.
Bankruptcy lies beyond
Hudson’s Bay pulled out after preliminary results for the quarter ending in January disappointed analysts.
The home goods retailer estimated sales for the quarter at $1.2 billion, well below the consensus estimate of $1.43 billion. Comparable store sales were down 40-50% from the prior year. Operating losses continued, but there was only a modest cash loss, the company said.
Hudson’s Bay had been part of a planned $1 billion stock offering last month, based on preferred stock warrants, that benefited new stock buyers in the event of bankruptcy. Just like in February, BBBY warned that a bankruptcy filing would be necessary if its capital raise failed.
Sue Gove has been interim CEO since July, trying to save the company after a disastrous shift in strategy by former CEO Mark Tritton. Tritton has transformed stores once known for selling discount branded goods into curated collections of store brands during the Covid-19 pandemic.
Gove sold some of the company’s stores and closed others in a bid to raise funds. But the failure to sell during the Christmas season was apparently too much for Hudson’s Bay. Since February, Gove said the company has successfully raised $360 million. This allowed it to remedy a default on a previous credit agreement, repay certain asset-based loans and pay interest on senior notes.
The new “market” offer is managed by a unit of B. Riley Financial (NASDAQ:RILY), which has a market capitalization of $818 million and says it provides “a private equity approach to investing.”
BBBY Stock: What Happens Next?
The latest offer looks like a final roll of the dice from Gove. Bankruptcy seems imminent. Whether this is a Chapter 11 reorganization or a Chapter 7 liquidation remains to be seen.
As of the date of publication, Dana Blankenhorn did not hold any positions at the companies mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.
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